Books on Game Theory Recommendation
- Thread starter CodeX
- Start date
Have you found anything that interests you?
Not sure where you are in studying the topic but there is a "Algorithmic Game Theory", Nisan et al. It's a 2007 book but it stirred up some great ideas for me. Pls let us know if you've found anything "good" out there..
From a psychosocial perspective there is the old "The games people play" book. I found it useful to see a perspective on why or how some people take on roles such as "the addict".. or "the victim" .. Using that information one could learn to be able to shift into more productive paradigms.
Not sure where you are in studying the topic but there is a "Algorithmic Game Theory", Nisan et al. It's a 2007 book but it stirred up some great ideas for me. Pls let us know if you've found anything "good" out there..
From a psychosocial perspective there is the old "The games people play" book. I found it useful to see a perspective on why or how some people take on roles such as "the addict".. or "the victim" .. Using that information one could learn to be able to shift into more productive paradigms.
One of the google search results:
Using Game Theory to Model Market Uncertainty
http://www.minyanville.com/business...robability-theory/2/6/2012/id/39227?page=full
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How does this relate to trading? I already mentioned the Random Walk model that treats security price changes as draws from a statistical distribution. A trader might use this approach by noticing that prices that go up tend to keep going up, so she buys stocks with good price momentum.
An example of game theory thinking is a trader looking for stocks with high short interest, in which the shorts have lost money and appear to have weak hands (perhaps because a popular short position just lost a lot of money, or perhaps because itâs near the end of a year in which short-bias hedge funds have had poor performance) and the stock has become hard to borrow. If this stock goes up, there may be a short squeeze to send it even higher.
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Using Game Theory to Model Market Uncertainty
http://www.minyanville.com/business...robability-theory/2/6/2012/id/39227?page=full
"
How does this relate to trading? I already mentioned the Random Walk model that treats security price changes as draws from a statistical distribution. A trader might use this approach by noticing that prices that go up tend to keep going up, so she buys stocks with good price momentum.
An example of game theory thinking is a trader looking for stocks with high short interest, in which the shorts have lost money and appear to have weak hands (perhaps because a popular short position just lost a lot of money, or perhaps because itâs near the end of a year in which short-bias hedge funds have had poor performance) and the stock has become hard to borrow. If this stock goes up, there may be a short squeeze to send it even higher.
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Read John Nash's Equilibrium. It is the origin of the theory you are asking about, and as somebody who did consider being a Sub Captain for fear of nuclear war with superpowers, you probably should already be familiar with it even if you don't understand the contents of the movie <i>A Beautiful Mind</i>.
I'll summarize its brinkmanship:
Good wins most if not all of the time.
Bad only wins rarely.
If Bad wins, Good always overcomes, until the long run is over and new actors enter the stage for new brinkmanship.
The outcome is the status quo due to rationality and a convex tradeoff between risk and reward. When bad wins, good overcomes because of rationality and the supposed force known as equilibria, therefore bad never wins and only tries to influence good. Both sides do nothing.
Mathematically it will take at least years before you figure this out, because it took me that long after I read it to understand why it deserved a Nobel Prize.
In my Game Theory class as a Sophomore at Centre College, I did win this game with $265. Only after did I realize that the prisoner's dilemma is brinkmanship, leaving me with a solid understanding of how the United States will rule this world nearly ad infinitum.
I'll summarize its brinkmanship:
Good wins most if not all of the time.
Bad only wins rarely.
If Bad wins, Good always overcomes, until the long run is over and new actors enter the stage for new brinkmanship.
The outcome is the status quo due to rationality and a convex tradeoff between risk and reward. When bad wins, good overcomes because of rationality and the supposed force known as equilibria, therefore bad never wins and only tries to influence good. Both sides do nothing.
Mathematically it will take at least years before you figure this out, because it took me that long after I read it to understand why it deserved a Nobel Prize.
In my Game Theory class as a Sophomore at Centre College, I did win this game with $265. Only after did I realize that the prisoner's dilemma is brinkmanship, leaving me with a solid understanding of how the United States will rule this world nearly ad infinitum.
Quote from nazzdack:
1) Can John Nash tell me the next tick in the 30-year bond?
2) You'll be better off by making sense of "price action" instead of being distracted by tangential academic minutia that isn't relevant to trading.
1) No, but Nash's Equilibrium can tell you when and if nuclear war will send it to zero, which could be even more useful.
2) Minutia that wins cold wars is more relevant to my generation than it ever will be to children born after the first cold war.
Winning the war is about knowing how long the game is played, and if you are out too far, you can be sure to lose at some point, but the extent to which you lose is also a calculation that Equilibria can make. It just depends how long you will be playing before you lose the dilemma.
As brinkmanship nearly always predicts no action by both sides, it isn't meant to predict what outside influence will have on the market once you enter it. Since supply and demand can't be influenced by actors bringing no supply and having no demand, obviously this doesn't have a thing to do with trading, so the game theory aspect of Equilibria may be more applicable to political apocalypse than it is to everyday moves in the market.