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Comment by hyperadvanced | Hacker News Reader

Yes, game theory is not a predictive model but an explanatory/general one. Additionally not everything is a game, as in statistics, not everything has a probability curve. They can be applied speculatively to great effect, but they are ultimately abstract models.

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You can use it for either predictive or explanatory purposes. In the early ('00s) years of Google it was common to diagram out the incentives of all the market participants; this led to such innovations like the use of the second-price VCG auction [1] for ad sales that now make over a third of a trillion dollars per year.

[1] https://en.wikipedia.org/wiki/Vickrey%E2%80%93Clarke%E2%80%9...

Google has now (mostly?) transitioned to using first-price, and more complicated (opaque) auction-style pricing for many of its advertising products.

https://blog.google/products/admanager/simplifying-programma...

> It’s important to note that our move to a single unified first price auction only impacts display and video inventory sold via Ad Manager. This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube, and other Google properties, and advertisers using Google Ads or Display & Video 360 do not need to take any action.

This is a good point, and I’m willing to concede that I may be wrong here, that predictive power can be gained from (possibly mis-) applications of abstractions onto a real space, which is what one of the real reasons to favor abstract thinking in business in the first place.

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