Fortune’s Formula & The Prisoner’s Dilemma
- BY admin
- August 16th, 2010
Fortune’s Formula / The Prisoner’s Dilemma
[Author: William Poundstone]
Two fascinating books have held my attention for the past few months – “Fortune’s Formula” and “The Prisoner’s Dilemma”, both by William Poundstone. Both delve deeply into game theory, information theory and risk management, explaining these complex concepts via fun-to-read stories about such colorful characters as Bugsy Siegel, Warren Buffett, Rudy Giuliani, Meyer Lansky and Ivan Boesky. The real characters behind these theories and principles include mathematical luminaries John von Neumann, Claude Shannon, Ed Thorp, John Kelly and John Nash – their stories are even more engrossing because of the immeasurable effects their thinking has had upon all facets of the world.
“The Prisoner’s Dilemma” is a historical overview of game theory, primarily focusing on John von Neumann and his development of this controversial topic. If you only read through the experiments and puzzles that von Neumann and his colleagues created to explore how humans deal with logic, greed, rational and irrational behavior, you’ll be sufficiently entertained and enlightened (and probably hungry for more). The stories about the personal lives of the mathematicians provides a even deeper understanding of how difficult it has been for the world to determine any practical applications of game theory.
“Fortune’s Formula” builds further upon these topics and takes on information theory, tying together the concepts of blackjack and hedge funds via the “Kelly Criterion”. More complex mathematics are explained via fascinating stories about gangsters, MIT professors and Wall Street gamblers of all kinds.
I found a wide variety of relevances and connections to the practice of brand experience strategy and design, especially when they relate to customer research and risk management (see my blog article “Betting Blind”) and irrational customer behavior (read about dollar auctions in “The Prisoner’s Dilemma”). Hopefully, you’ll find connections to your world as well – enjoy.
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- Category: EX LIBRIS