Sunday, December 22, 2013

Play the game, in theory

Game theory is a pretty fascinating subject. Even though I had spent almost three years in MBA classes, I somehow managed to evade it with one or the other interesting alternatives cropping up in the form of electives. Recently I picked up a book “The art of strategy” which was lying around in my brother’s book shelf. Based on game theory, it threw some pretty good insights about how the theory can be seen in the practical world.
For starters, consider a situation wherein there are two sailors competing with each other in a race. Since sailing involves several strategic decisions that needs to be taken, what is the best way to succeed? The answer depends on whether you are leading the other person or trailing. If you are leading, then you have to just copy the strategies that the trailing person is employing, because no matter what, if those strategies speeds up his boat, then your boat would also speed up by the same amount or in case the strategy completely flops then also you are ahead of him and you are bound to win the race anyway. This effectively kills the strategy of the trailing guy. So taking lead in such a situation becomes very critical. This strategy would not work if there are multiple players in the game though. Some traces of this strategy can be seen in our telecom domain as well. Samsung and Apple are in a neck to neck race with the former slightly ahead, but they are always looking back towards Apple for guidance, be it in curved phones or smart watches. Companies like Nokia and Sony are right now far down in the horizon, so even a 41 MP sensor or a complete water proof phone doesn’t muster any notice by the leader.
Traffic is technically a collection of humans sitting in tin boxes called cars doing nothing much till the car in front moves. But in India it takes a completely different meaning, It stands for huge mass of completely disconnected individuals doing their own things in a larger setup. How many times have we faced the frustration of standing orderly in a traffic jam and a slick cab driver would come in the wrong side and nuzzle into the traffic at the front. Our frustration level increases crazily. The cab driver reaps a significant savings in time whereas all the other drivers in the traffic would suffer a minor time cut. If the drivers breaking the law increases, then the incentive for the obedient drivers to break the law also increases, so much so that going in the proper lane would generate more reward than breaking it, but this equilibrium is not a good one to have. The vehicles coming in the opposite direction would also suffer at the hands of these law breakers. What is the best way to curb this practice? Imposing severe fines or probably penalizing them on time is the best way, the level of these fines should be so heavy that more than 99.9% of the drivers should conform to the rules. Even if you get caught once, it should be enough to make you think ten times before breaking the rule again. The same thought can be applied to shortcuts as well. Shortcuts saves time, even though in terms of distance it will usually be a little longer. There will be an optimum capacity for this shortcut beyond which the incentive to take it would decrease rapidly. How to preserve the sanity of the shortcuts? Once you discover one, keep it to yourself.  In similar ways, if you have an expressway along with a alternate toll free route, it is important to price the toll for the expressway such that the traffic doesn't go beyond a point. The optimum equilibrium needs to be critically analysed.
Another interesting concept is that of mixed strategy. Here you let chance to make a decision rather than actually thinking through an outcome. Consider the case of a football player trying to take a goal kick, assuming he can kick the ball to the right, or to the left. How should you choose among these two options? If there are different payoffs associated with each of the options, then choosing the correct proportion in terms of chance is important. It would not be just feasible to select either right or left based on chance (coin flip). An optimal randomization would be needed based on the payoffs.  Say if the striker can hit the net 58% of the time when going for the right and 85% of the time when he hits left then a 50: 50 chance will give a payoff of 71.5 (average of the two). The above score is for situation when the goal keeper has dived to, say his left side. Now if the payoff for the striker is 70% for the right side kick and 55% for the left side kick when the goalie has dived to his right, then the strikers combined payoff will be 62.5%. We can clearly see that with 50:50 chance the strikers combined payoff can be kept to 62.5% by the goalie by diving to the right always. So the optimal mixture where the striker maximizes his payoff would be the percentages where the left and the right payoff are the same for him and the goalie remains indifferent to both directions. Thus optimal mixture turns out to be 72:28 for the striker to choose between right and left.
Taking a revolver with one bullet and rotating it randomly before the hero and the villain alternately put it on their head and pull the trigger is often seen in our Hindi films. This act has a name in game theory, it is called as brinkmanship. Brinkmanship exploits the increasing tension with each act in the game. The probability of failure goes on increasing with each small step the opposing parties take. Thus in a way both the players are on a slippery slope, the person who blinks first will lose everything that he is playing the game for.

Finally one of the most effective strategies that one can use practically is what I would call “cut the oxygen strategy”. Facing a difficult challenge such as reducing weight, a person would come up with umpteen excuses to eat what he/she likes.  But if you make the alternate route of not reducing weight very painful such as paying a terribly huge fine to a friend if the set target is not met is pretty effective. It will push the lazy self towards action. So if want to be an entrepreneur, before thinking of what to do just resign from your job, go down to the street and start off, your probability of success is the highest this way.

Tuesday, December 10, 2013

Empire of the Moghul: Book series

One man’s ambition led to a dynasty of rulers in India. Babur being a heir of a small kingdom of Ferghana which was close to Samarkand, dreamt big. All through his travails he never lost sight of his vision, a grand one at that, to gain a big empire and to establish his dynasty.  His travails were no less trivial, from losing his birth kingdom and becoming a mere bandit, to conquering the Golden city of Samarkand three times during his life time and losing it after a short rule and to surrender his sister to his sworn enemy so that he could continue to live and fight another day. The duels with Shaibhani Khan and his loss and struggle makes for an eminent read in the first book of the series, Raiders from the North. A stroke of luck in his getting hold of the gun powder based canons finally enabled him to overcome a 1:10 numerical inferiority to gain control of Hindustan. The book gives great insight into the thought process of Babur as it has based itself heavily on Baburnama which Babur had written as his diary.
The second book “Brothers at war” is about Humayun, the most able son of Babur. Humayan is usually portrayed as weak link in the whole dynasty, but after reading this book you will think otherwise. Humayun looses the hard won empire of his father by callously underestimating his enemy Sher Shah. His struggles to keep his family and hopes alive by roaming around in the deserts of Rajasthan is heart rendering. Being completely driven out, he finally gets help from the king of Persia, with his support he goes on to conquer Kabul back from the clutches of his brother Kamran. His patience with his half-brothers is simply commendable more so because later in the dynasty even full brothers don’t show any mercy to each other. Finally in the end Humayun seeing an opportune moment at the death of Sher shah, rides back to conquer Hindustan after a gap of 15 years.
The third book “Ruler of the world” is about the most famous moghul emperor Akbar. Akbar having inherited the empire at a very young age is initially chaperoned by the famous general Bairam khan. After some years of remaining in the shadows he comes out and assumes full command by abruptly retiring Bairam khan from his services. His brutal attack on the fort of Chittorgarh to establish his supremacy and his later tactics of marrying Rajput princesses is vividly written. His famous association with the Salim chishti is well brought out. Being one of the astute rulers, he didn’t fall into any major vices and caught the pulse of the nation very well. In the later stages, animosity with his son Jahangir regarding his capabilities to be a future ruler and his great love towards his grandson ShahJahan makes a good read even though the fast paced action is sorely missing during this phase. The episode of Anarkali made famous by the movie Mughal-e-azam finds a mention in this book as well.
The fourth book “The tainted throne” covers the life of Jahangir who after his father’s death inherits perhaps the most prosperous empire. His infatuation with Mehrunissa and his plot to get her husband assassinated forms for a gripping read. Marrying Mehrunisa, who later on becomes Noor Jahan, Jahangir starts slipping into his own world of opium and liquor making Noor Jahan more powerful by the day. Seeing a challenge to her authority in the rise of the young prince Shah Jahan, she tries her best to strangle his ambitions of becoming the next emperor. With the death of Jahangir, the struggle for the throne again begins.
The fifth book and the last one in the series till now is “The serpents tooth”. Shah Jahan is now reigning supreme over Hindustan. With his loving wife and family by his side he sees no reason why the Mughal Empire can’t expand into newer horizons. The building of the great Taj mahal at the death of his wife is described in sufficient detail. Finally his great attachment towards his eldest son Dara neglecting the other sons results into a crisis which makes him the first Mughal emperor to get dethroned when living. The brutal tactics employed by Aurangzeb to annihilate his own brothers one by one to eliminate all contenders to the throne shows you how much you can debase yourself for getting the big prize of Hindustan.

Overall a very captivating series. Never a dull moment and most of the books read like a thriller rather than a historic book.