Game Theory


It is possible that Richard Thaler changed his mind about economic theory and went on to challenge what had become a hopelessly dry and out-of-touch discipline because, one day, when a few of his supposedly rational colleagues were over at his house, he noticed that they were unable to stop themselves from gorging on some cashew nuts he’d put out. Then again, it could have been because a friend admitted to Thaler that, although he mowed his own lawn to save $10, he would never agree to cut the lawn next door in return for the same $10 or even more. But the moment that sticks in Thaler’s mind occurred back in the 1970’s, when he and another friend, a computer maven named Jeff Lasky, decided to skip a basketball game in Rochester because of a swirling snowstorm.

Always good to be reminded that we don’t play rationally, despite expectations. Hence the need for frameworks and methodologies to avoid overly rational expectations about behavious by us and others. In other words, to minimize the ‘human factor’ – such as with the use of ‘lean startup’ methodologies in early stage startups.


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