GAME THEORY AND OPPORTUNITY ANALYSIS Decision makers exhibit category error in strategic analysis. Risk is confused with opportunity.
Game theory matters. It really matters which game the business Agent (corporate or individual) think they are playing.
https://pmc.ncbi.nlm.nih.gov/articles/PMC8288874/
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Challenges and opportunities facing game theory and control: an interview with Tamer Başar
The Control community has recently witnessed an almost exponentially growing interest in the application of game-theoretic concepts and tools in research on control, multi-agent systems, and networks.
IF THEN
The predictive mind is psychologically attuned to a naïve consequential model:
IF>THEN
The consequential model does not allow for factoring in of case certainty. That certainty cannot logically enter into the IF premise, so cannot result thru into a consequential matrix: THEN 1 2 3 n.
A completely different antecedence model is required, which takes as its factors:
BECAUSE>SO
PRIMITIVE RISK ANALYSIS
There is a foundational explanation for the discordance in evolutionary psychology. Our primitive ancestors were required – in life changing decisions – to evaluate alternate course of Action.
The compulsion was imposed by living in a state of nature, as hunter-gatherers. The Agent – wither acting singly or as a tribal co-operative – has to make decisions on a daily basis. The primary paradigm is between low [risk/calorific value] gathering and high [risk/calorific value] hunting. A tree fruit will not turn around and bite you.
This is foundational consequential model thinking:
IF>THEN
It is clear from the spiritual legacy in cave art and other prehistoric works, that these hunter-gatherers had a fundamental understanding of death: as a certainty. At that civilizational level, there was nothing which could be done to change that ground state.
There was no imperative to think around an antecedence model:
BECAUSE>SO
OPPORTUNITY ANALYSIS
The building block concepts of opportunity analysis can be located in the works of Thomas Aquinas. See the useful guide at: https://plato.stanford.edu/entries/aquinas-moral-political/#IdenMansLastEndFounForAqui
What we witness in medieval thought is the use of game theory to locate guides to action in the context of omnipresent deity. In this model, God is BECAUSE, and the logic of divinity lies in assessing what responsive actions SO are best productive of divine valuation or – increasingly – humanistic worth.
MODERN SCIENTIFIC PARADIGM
That experimentalist mandate morphed into modern science with its consequential model for drawing reasoned conclusions:
IF>THEN
It is thought-provoking the insights and innovations of quantum mechanics fundamentally challenge the consequential model. BECAUSE certain matters exist in an undefined state > SO present action can collapse the uncertainty. In the last generation of experiments, even producing time-travelling particles, which act wholly contrary to the consequential model.
BIG GOVERNMENT
The era of big government has produced a new landscape for the antecedence model. Yet Agents in business often use a consequential model for decision making.
For example: suppose a federal tax on an economic event: say a profits tax. To be in a state of corporate profit is to suffer the impost.
That landscape is not amenable to usage of the consequential model. Well, the enterprise can volunteer to produce less profit: but that is not a commercially rational response.
The obvious analytic is the antecedence model: BECAUSE the impost exists, SO some ameliorating action produces a better result.
It is the latter part of this which causes conceptual problems. The Outcome is analyzed within a consequential model: but that is the wrong model:
· No consequential model can return an index which is relative to the foundation state
· The antecedence model dictates that any rational response SO to the foundation state returns some positive index.
The challenge is not then between:
· action < > no action: consequential model
but
· some action < > some other action: antecedence model
ZERO SUM PLUS
Another deficit in Opportunity Analysis is the pervasiveness of zero sum thinking.
In a 2021 Paper by Johnson, Zhang and Keil:
Zero sum analytics rely upon a consequential model. It is with that model that the business mind is trained. But the model is inadequate to Opportunity analysis, where there is no trade off between ground state BECAUSE and opportunity SO.
RATIONAL RISK ANALYSIS
The ultimate problem is in the label on the tin. There is no “risk” to analyze.
Economic activity (legal structures, fiscal mechanics and so on) in the landscape of big government policy has more in common with Aquinian theories of value-enhancement.
In the era of big government, constructive analysis of economic activity works only in a paradigm of the antecedence model.