Barry Nalebuff, the Milton Steinbach Professor of Management, is an expert in game theory, the Nobel Prize-winning theory of human behavior.
“Game theory is the science of strategy. It's recognizing that the success of what you do depends on what other people do,” said Nalebuff.
Nalebuff teaches game theory to MBA students at the Yale School of Management, but he recently put his expertise to use outside of the classroom as a consultant to ABC Primetime. He helped the television show construct two challenges based in game theory for its “Basic Instincts” special series. The episode aired on December 20.
One challenge took place in Washington, DC. Six pairs of strangers in six different locations around the city were given these instructions: There is another pair of people looking for you. Find them.
Without any other information, such as a name or a photograph to go on, this task would seem to amount to finding the proverbial needle in a haystack. But, as Nalebuff anticipated, each pair of strangers put themselves in the shoes of the others and thought about well-known landmarks they might go to. Nearly all of the pairs eventually zeroed in on the same target—the Washington Monument.
“It’s an experiment in common perceptions. Can I think about what you're thinking that I'll do?,” Nalebuff explained in an interview with Primetime.
The second challenge was created to show how game theory can not only predict what someone will do, but how it also can influence behavior – in this case, how it can motivate weight loss.
Nalebuff created a competition in which two teams of people who wanted to lose weight were pitted against each other to see who could lose more. Each team member to lose 15 pounds in two months would earn a point for the team; the team with the most points wins. Each team was given a different motivation for losing the weight.
Team one, staff members from the R.C. Bigelow Tea Company in Fairfield, CT, were motivated through positive reinforcement. They were told to lose weight in order to feel better and be healthy, and to do it through teamwork. Team two, staff members from the Bridgeport Bluefish, a minor league baseball team in neighboring Bridgeport, CT, were motivated through negative reinforcement, specifically, the fear of public humiliation. Before the challenge began, the team members agreed to be photographed in skimpy bikinis. Any team member who didn’t meet the weight loss goal would have his or her photo displayed on the JumboTron in the baseball stadium during a game. In game theory, this is known as a credible threat.
Nalebuff predicted that the Bridgeport Bluefish team would win.
“If they miss by a pound, it’s up on the screen, and so they're going to overshoot,” said Nalebuff.
Many on the Bluefish team did exceed the 15-pound weight loss goal, but in the end, the team from Bigelow Tea won 8-6.
In game theory, positive incentives can be just as powerful as a credible threat.