Okay. Hello. Welcome to my presentation about game theory basics and winning strategies in life and business. And the goal here really is to make you unlock smarter decisions to outsmart your friends in video games or ace in group projects. So let's move to a short introduction about me. I'm Fri Kamisha currently in Germany. I um attended a year at the university programs in economics at the University of Rosto. I'm currently in a German high school with advanced courses in mathematics, physics, and computer science. I did some internships at EY, PWC, and Alian. So, but let's talk about why game theory matters. Game theory shows up how teaming up often beats going solo. For example, in video games, you often see that when you team up with others, you have a way higher chance of winning than just playing alone. And this gives you the tools to guess. Game theory gives you the tools to guess what other people's will do and to plan your moves accordingly. The key idea is that your choice um affects others and their choices affect you. Like in a group chat, deciding where to hang out. Fun fact, game theory was invented in the 1940s by math genius Fenoyman and Morgan Stern and is now used in video games, apps, and even Netflix recommendations. Okay, so let's talk about what game theory is. Game theory is a smart way to study decisions where everyone's choice affects the outcome like a massive multiplayer game. The key parts here are the players, the strategies, and the payoffs. The players are you, your friends, but also can be teams or companies. The strategies are your moves, for example, like passing or shooting in soccer. And payoffs is for example, what you get, the points, the grades in school, for example, or money which companies get. So in game theory, you always have to remember that decisions are not perfect because we have to deal with incomplete information with stress or biases. For example, choosing how much to study for a test while guessing if your classmates will cream or slack. So let's talk about time types of games first and then we can move into more specific details. So there are multiple types of games. For example, the simultaneous move game where everyone acts at once and there is no peing. For example, rock paper scissors would be such a game. Then we have the sequential move game where you take turns and observe the previous moves. For example, in Uno or Monopoly. Then we have the zero zum game. So where one's gains, the other one's losses. For example, in debate or sports because there can only be one winner. Then we have zero and nonzero sum games where everyone can win or lose together. For example, in a group project where the whole group success is really and where everyone can win or everyone can lose. Then then we have perfect information games where all moves are visible. For example, chess because you know which moves the other player has done in the past. And then we have imperfect information where you don't know all the information from the other players. For example, in poker where you don't know the enemy's cards. And of the biggest contracts are between zero sum versus non-zero sum games and simultaneous and sequential games. And to have the right decision to make the right decision, you need to know which game you are playing in. In real life, most often it's you're play you're dealing with imperfect information because we just don't know everything which goes on. So, let's talk about dominant strategies first. A dominant strategy is a move that is your best response regardless of what your opponent chooses. For example, in life, if you have a dominant strategy, they're usually rare, but if you have one, you should always use it. However, if your move is 100% predictable, smart opponent will exploit you and will exploit your move. And therefore, you should randomize your moves a bit so no one can really read you. So, let's talk about another term really important for game theory. It's a Nash equilibrium. For example, um it's a state where no player can improve the outcome by changing the strategy alone. An example for this would be the taxing back standoff. So you don't want to tax first. The other person also doesn't want to tax first and so you both wait for hours and neither of you wants to change. And that's a Nash equilibrium. So let's talk about a specific example for game theory. A specific example or the most common example is the prisoners dilemma. And the core problem with the prisoners dilemma is that two players choose can choose to cooperate or to defect. Um and each player is a temptation to betray for personal gain. But if both do everyone loses and the lesson therefore is selfishness can sometimes backfire. For example, when both players here are selfish and defect, then they're worse off than if they both would have cooperated. And the problem really shows with the price of anarchy. Basically, it's the gap between how well a group could do if they co coordinated well so poorly they do when everyone is selfish. You can calculate it really easy by dividing the social cost of the selfish behavior by the social cost of the optimal coordination. For example, if everyone rushes at the same door at lunch hour, everyone gets stuck. If everyone walked in a single line completely coordinated, the whole group would eat 5 minutes faster. And the real world impacts is for example in traffic. And that's why we have traffic lights because without them the price of anarchy would be a constant gridlocks and many accidents. So let's talk about social capital and repeated games. How and that's how we can avoid selfish behavior. It's about the concept that in one time games betrayal often pays out. As we saw in the prisoners dilemma, if only one person defects, it's really positive for them. However, in repeated games, your reputation is your currency. And so, if you betray one person once, they might never cooperate with you again. And that's a permanent game over. As you see in many companies, it's not just about making one deal, one good decision, but about building trust and building a history that makes other people want to team up with you. And so the key lesson is being nice is a dominant strategy if you plan on playing for a long time. If it's only one game, often um betraying others can pay out. However, in real life as it's a long game and if you because you play repeated games being nice it's the dominant strategy. So let's talk about other things how you can make good decisions and the main point about game theory is always about making the rational decision. So rationality means choosing the path that leads you to the best possible future outcome. However, there's often a trap with this and that's why people do not always do the rational thing and that trap it's called the sunk cost fallacy. So throwing good energy after bad energy just because you've already spent the time or money. An example for this would be watching a boring 3-hour movie because you paid for the ticket even if it would be way better to just get out and leave. Or another example would be staying in a club you dislike because you already bought the hoodie but don't really like it. You could do something way better somewhere else. And so the rule for life, what everyone should remember is forget the past. It's a s cost. You can't change it anymore and only focus on the future payoff which can occur. So let's talk about some other options for game theory. How to make the games more fair and how to force or how to um increase cooperation. An example um would be reverse game theory. So instead of playing the game, you just build the game that everyone is forced to play thing. This is done in video games where matchmaking algorithms prevent people's um from smurfing. So pros playing against worse players or in a school where teachers using random a random app for teams so nobody feels left out or the teams are completely fair. And the key insight about this that is that if the game is broken, you don't just play the game or you don't just play better, but you change the rules so so that the game becomes fair for everyone. An example of such a game would be 4K cutting. What you want is you have want to have a fair division division and so the minmax principle applies here. You want a game that um where you have to act to minimize your maximum possible loss. And the algorithm for this in this simple example with cake cutting would be one person cuts the cake or for example divides the jaws or does something else and the other person chooses their piece first. So the cutter is forced to be 100% fair because if they make one side better, the other chooser will take it. Another example for making games fair is in auctions and especially the victory auction. So it's used by eBay and Google ads and the winner is the highest bidder, but they only pay the price of the second highest bid. And why is that so important? It's because it removes the game of trying to guess the others bit. It encourages you to bid your true value and it avoids the winner's curse that you just overpay to win. And actually the person who invented it um William Vickery won in 1969 um 1996 the Nobel Prize for improving efficiency in auctions. Okay, let's talk about one of the most important strategies which there are in game theory. This is a really simple strategy but it won many tournaments and it's a tit for t strategy. So it's basically you start being nice. You start by cooperating all the time. However, if someone betrays you, you retaliate immediately and you copy their move. Basically, they betray you. So, you betray them as well. However, then you are forgiving it again. If they cooperate again, you go back to being nice. And why this wins it is because it's simple and it's transparent and prevents others from exploiting you. For example, if someone ghosts you on your DMs, pull back. However, if they reply, be cool again. So let's talk about some real world applications. And basically in summary, life is a series of interconnected games. Whether it's in physics or everyone else, you want need to understand the players, the payoffs, and the rules. Especially if you work somewhere and if you study something, you always need to think about the broader picture. And the takeaway is don't just play the game, but analyze it and design your own incentives and always look for the win-win because most of the time cooperation is the best thing for everyone. So, let's um talk about the conclusion. So, the conclusion is really cooperate long-term and aligned rewards, designs, and smarter rules. Thank you for