The Art of Strategy by Avinash K. Dixit & Barry J. Nalebuff

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“The point is to illustrate what makes something a game: you have to take into account the objectives and strategies of the other players.”

“There are two ways to move second. You can imitate as soon as the other has revealed his approach or wait until the success or failure of the approach is known. The longer the wait is more advantageous in business because, unlike sports, the competition is usually not winner-takes-all.”

“When thinking strategically, you have to work extra hard to understand the perspective and interactions of all the other players in the game, including ones who my be silent.”

“You many be thinking you are playing one game, but it is only part of a larger game. There is always a larger game.”

“When you find yourself playing a strategic game, you must determine whether the interaction is simultaneous or sequential.”

“Look forward and reason backwards.”

“Many people have an instinctive aversion to theory of any kind. Of course theories have their limitations. Specific contexts and experiences can often add to or modify the prescriptions of theory in substantial ways. But to abandon theory altogether would be to abandon a valuable starting point for conquering the problem.”

“To figure out what the other players will choose at future points in the game, you need to know what their objectives are, and in the case of multiple objectives, how they will trade off against each other.”

“If you have to take some risks, it is often better to do so as quickly as possible. That way, if you fail on your first attempt, the game won’t be over.”

“A Player is said to have dominant strategy if that same strategy is better for him than all of his other strategies, no matter what strategy or strategy combination the other player or players choose.”

“If you have a dominant strategy, use it.”

“When errors are possible, as they always are in practice, the size of the punishment should be kept as low as is compatible with successful deterrence in most circumstances”

“When the interest rates are low, the future is more valuable.”

“Eliminate from consideration any dominated strategies and strategies that are never the best responses, and go on doing so successfully.”

“Having exhausted all the simple avenues for dominant strategies or ruling out dominated ones, next search for all the cells of the game table for a pair of mutual best responses in the same cell, which is a Nash equilibrium of the game.”

“In a game of pure conflict (zero-sum game), if it would be disadvantageous for you to let the opponent see your actual choice in advance, then you benefit from choosing at random from your available pure strategies. The propositions in your mix should be such that the opponent cannot exploit your choice by pursuing any pure strategy from the ones available to him – that is you get the same average payoff when your mixture is pitted against each of the pure strategies in his mixture.”

“The eight fold path to credibility:

Change the payoffs of the game – turn a threat into a warning, a promise into an assurance.

  1. Write contracts to back up your resolve
  2. Establish and use a reputation

A second venue is to change the game by limiting your ability to back out of a commitment.

  1. Cut off communication
  2. Burn brides behind you
  3. Leave the outcome beyond your control, or even to chance

If a large commitment is broken don into many smaller ones, then the gain from breaking a little one may be more than offset by the loss of the remaining contract.

  1. Move in small steps

A third route is to use others to help you maintain commitment

  1. Develop credibility through team work
  2. Employ mandated agents”

“Theory often makes it sound as if the various moves being discussed are either 100 percent effective or not at all. Reality is almost always somewhere in between.”

“Actions that are intended to convey a player’s private information to other players are called signals. For a signal to be a credible carrier of a specific item of information, it must be the case that the action is optimal for the player to take if, but only if, he has that specific information.”

“In some circumstances, thee best way to signal your ability or type is by not signalling at all, by refusing to play the signaling game.”

“When actions are taken in a piecemeal way, each step of the way can appear attractive to the vast majority of decision makers. But the end is worse than the beginning for everyone. The reason is that voting ignores the intensity of preferences.”

“The point is that when other people’s perception of your ability matters, it might be better for you to do things that increase your chance of failing in order to reduce its consequence.”

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Aesthetic relativism

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One of my friends was recently describing a conversation they had with a teenager, complaining that “they started every sentence with the word ‘I’ and they didn’t ask any questions!”

We seem to be living in a world where personal curation, online personal brands (I see the irony…) and motivational speakers all push the notion that your opinion is profound and worth a huge amount.

No more is this seen in the art world, where we lack consistent criticism for the sake of Aesthetic Relativism – the idea that there’s no absolute truth in the quality of art or appreciation of beauty, that it’s all in the eye of the beholder.

This is incorrect.

Art has to be a combination of skill and application of the skill. It’s like saying being good at sport is solely down to talent, which has been proven time and time again to be not true (re Gladwells ‘Outliers’).

The art masters spent many thousands of hours practising the form of art before making their master pieces. Mozart practised for thousands of hours before making anything halfway decent. The argument that “it’s good because I like it” is just wrong.

The argument that modern art is overly simple and anyone can do it is true in form, but in inspiration and subtlety needs training and sensitivity, which not everyone can do.

You can’t tell me that just because someone likes the Chuckle Brothers more than the Wire, that it’s a better show. It’s not. On any level.

There is huge value in gut reaction and your instinct, but there’s even more value in your trained gut reaction and trained instinct.

This over-valuation of opinion has led to the mad world of social justice warriors and hate campaigns where people think they are right just because they are offended.

In his Desert Island Discs, Jimmy Carr said “You shouldn’t have to explain a joke, because it’s a joke.”

Just because you’re offended, it doesn’t make you right.

You opinion is worth something, but it’s worth a hell of a lot more if it’s trained.

Prioritise and execute

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A while ago, a team member came in on a Monday and said this week was going to be a bad week because there was already too much on.

Too many requests, too much work.

What they, and many people fail to realise, is that there is freedom in having too much to do.

It’s an opportunity to prioritise and execute.

You get paid for ~7 hours work per day.

You can only achieve a certain amount in that time.

Write a list of everything on, then prioritise and execute.

Communicate what you are going to get done and when you are going to get it done to everyone involved.

Then work hard.

Anything that doesn’t get done wasn’t important enough to be prioritised or delegated, so frees you of that task anyway.

Repeat tomorrow and you’ll be fine.