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Game Theory #1: The Dating Game

Source: https://www.youtube.com/watch?v=hE4l9WyLF3U

Original Transcript

This semester we are going to analyze a question together which is how do societies behave? Why do we do what we do? What motivates us? What drives us? And there have been different theories as to what drives human behavior.

So let's go over some theories. The first theory comes to us from religion. And the idea is that we are all driven in a war between good and evil. There's a good side to us and there is an evil side to us. There's Satan and there's God, and we are constantly in a battle in ourselves. Do we move towards Satan or do we move towards God? And that's the core of human civilization. So religion is meant to give us the strength to show us the path towards goodness. That's one theory.

Another theory comes to us from biology. And the idea is sex. We want to pass on our genes forward because that's the point of our existence. If we cannot have children, we all die. So the point of existence is to have children and have them pass on their genes to others. And for males and females, life is different because as a man, you have a penis and all you have to do is stick your penis into a woman and you're good. So you want to stick your penis in as many women as possible and that's the point of your existence. But as a woman, your life is different because it's hard to give birth. It takes 9 months to incubate the child in your womb and then childbirth is the most painful experience anyone will have ever experienced. And then the child will take like 16-18 years to raise to maturity. So it's a huge investment on your part. So as a female, you have to be very cautious, very careful about who you marry or who you have sex with. So life is a struggle between men who want to put their penis into anything and women who want to be careful about who they marry. That's the idea of biology.

Then of course you have the idea of race and culture — that the world is a struggle between these different races and cultures for dominance, and each race, each culture has their own characteristics. Then you have economics, and what they believe is that we are driven by money or self-interest. We want to make as much money as possible and that's what drives us.

And the last big theory is the idea of liberalism that comes from the enlightenment. And here the theory is that history is a progress towards enlightenment, to rationality, to truth and to justice. So the inevitability of history of human development is towards paradise, towards heaven. And maybe we go off track now and then but inevitably we move towards God. We call this liberalism. So these are five theories. There are others but these are five theories that show you the diversity, the variety of ideas out there.

What I will do this semester is present to you another theory which I call game theory. And my argument to you is that game theory is the best way to understand how humans behave, what drives nations, what drives societies, what drives humans. So that's my argument to you this semester. So the entire semester we will study game theory.

So what is game theory? Game theory is very simple. The idea is that there are three components to a game — just three aspects to a game. There are the players, the participants. Then there are the rules or the constraints — in mathematics we would call this the boundary conditions, the limits to the game. And the third aspect are the incentives: basically, how do you win this game? What do you get from this game?

My argument to you this semester is that if you study all three — if you figure out who the players are, understand the rules, understand the incentives — then you understand how the game works and therefore you can predict how the game will turn out. That's the skill that I want to teach you this semester.

And what I promise you is that if you learn game theory, there'll be three major benefits to you as a student. The first benefit is that you become a better person. The point of education is not to get good grades or get into university or get a good job. What I believe is the point of education is to make you into a better person — which means that you are a much more thoughtful person who can better analyze yourself and the world around you. That allows you to make better decisions. This makes you a much more curious, much more moral and much more imaginative person. So one benefit of learning game theory is you become smarter and therefore you become a better person.

Number two is you'll be able to understand the world that we live in because this world is kind of stupid. So you may have heard that Donald Trump and the American military went into Venezuela for no good reason, kidnapped a president of Venezuela, which is against international law, and then brought him back to New York City where he will stand trial. But our class is not meant to say this is stupid or this is wrong because we all know it's stupid and wrong. We're trying to figure out why this happened and what this will lead to. And so we will be in this class studying and analyzing current events to understand how the world really works, why people behave the way they do, and understand how the game of the world works. And this requires you to actually follow the news. We'll be looking at the war in Ukraine, a new war between Israel and Iran, what's happening in South America, the conflict between China and Japan, the relationship between United States and China. So this is relevant to your lives because you will eventually have to work and live in this really screwed up world that we live in.

And the third benefit is once you understand the game you will have predictive powers. You'll be able to understand how the world will develop. You'll be able to analyze your own life and understand how you will develop and that gives you control, sovereignty over your own destiny. That's my promise to you. If you actually spend the time to listen carefully in class, to participate fully, to follow the news, and you spend the entire semester doing so, then these three benefits will start to accrue in you.

So this is all very abstract. And so what I'm going to do now is use an example of a game to show you how game theory works. Let's use a really simple game. Let's imagine there are five boys and five girls and they want to get married. So these are the players and what we're going to do is divide them up into male and female. Then we will rank the males and the females from five to one — five means really the best, one means the worst. And we can rank all ten according to these metrics.

And how do we rank them? We rank them according to their attractiveness using three criteria. The first is genes, the second is wealth, and the third is status. Genes means that you're good-looking, you're tall, you're healthy, you will live a long time. Wealth just means that you or your family have a lot of money. Status means that you have a lot of friends, you have a high-status job, you come from a really powerful family.

So according to evolutionary biology or evolutionary psychology, we're always trying to find the best genes to procreate because this ensures that our genes pass on. Men have a penis which they can stick into anything. Women have to give birth. So the strategies are different. Number five is trying to have sex with all five women — that's his strategy. But number five female wants to ensure that she only gets number five. And according to evolutionary psychology all five females should try to procreate with number five. But we know this is suicidal because the human race couldn't survive — it'd be idiotic for all five women to just try to marry this one guy.

So let's figure out what rationally should happen. Number five is trying to maximize the game, so he's trying to sleep with all five women. The problem is if he does that, these five know they're all being played. So the best woman is like, you know what, there's not much difference between four and five, so I'll just go marry this guy. So number four is gone, and number four is like, five is probably making a good decision so I'll just go marry number three. And now number five, by trying to marry all the women, is stuck with the worst choice. He's stuck with number one.

And guess what — if any of these guys tries this, the same thing happens to him. Where four is like, I can't get five, but I'll try to get four and three together. And then three is like, screw you, I'm going to go and marry two. So if they try to individually maximize their outcome, they all get screwed in the end.

So the only way out of this is if they cooperate. And the best way to cooperate is basically: five goes with five, four marries four, three marries three, two marries two, and one marries one. And the world now is perfect. Everyone has a husband and a wife and they can just have children and the world is perfect. And this is actually the best strategy for all the players. In game theory we call this the Nash equilibrium — it just means that you always reach a state in which all the players maximize their outcome.

Now there's a problem with this though. The problem is in real life no one does this. In real life, no one actually follows this rule. Natural living is just a theory we made up. In real life, we choose to be suicidal.

So let me tell you about a game I played. Last year I was teaching this class and I asked the boys and I asked the girls: pretend you're now 30 years old, your parents are pestering you to get married and you've been on the dating market for 10 years, there's really no one that you think is perfect for you, you've basically given up on love — imagine that you want to get married now and tell me what is the minimum requirement you need in order to agree to marry someone else. The boys were pretty simple: as long as she likes me and as long as I'm attracted to her, I'm good. Girls were different — girls were like, if I don't love him, if I'm not even attracted to him, I need about a million dollars a month.

This makes no sense. In theory we should follow the Nash equilibrium. In real life, all the girls want this one guy. And 3, 2, and 1 — they watch Netflix, they watch porn, they play video games. They've given up on life. We call these people incels — involuntary celibates — because basically they have given up on life and life has given up on them. So this entire competition is between number five and four for all the women in the world. And this is again suicidal. This will lead to the death of humanity.

And the question now is: why are we suicidal? And so let's look at game theory analysis — the players, the rules, and incentives. The players are doing stupid things. The rules, we know. But incentives is something that we have to think about. Why are they behaving like this?

And the answer is because they're not interested in sex or procreation. What they're interested in is status. That's the game they're playing. I don't want to marry someone to have children. I want to marry someone so I can take a picture of her and post it on Instagram so I can get a lot of likes. I want to marry someone so I can walk with her in the mall and all the guys are jealous. I want to marry someone who I can brag about. It's a game about status, not a game about sex or procreation. People are not being rational about biology — people are trying to maximize their status in life. And that's why everyone's behaving like this.

But then this leads us to a question: clearly this is wrong, because if we behaved like this throughout human history we wouldn't be here today. How is it that we have this game today and we're going to die, but we must have come from somewhere? The answer is the game changes over time according to the superstructure of society. The superstructure is what determines the nature of the game. Just think about the big picture: how many people are there? Is society wealthy or poor? Are there enemies to the society? This is the superstructure — demographics, economics, culture, politics, religion. And these things together determine the nature of the game.

So let's look at three examples of superstructure. Example one is a low population society — maybe 200 people, a village — they are poor and low technology. Low technology means they don't have access to clean water, they don't know what hygiene is, they don't understand what germs are. So it's very easy for a woman to die in childbirth. And low competition, meaning there are no competing villages against them.

Example two is a growing population — maybe 10,000 or 20,000 people — growing in wealth, they have some technology like access to clean water, and high competition, meaning they're competing against different villages and societies around them.

And the third superstructure is overpopulation — the world we live in today. In China you have a billion people. Too much wealth but with wealth you have inequality. And then you have high technology, which means that every woman who gives birth will not die and every child born will live. And then you have equilibrium — yeah there's competition, but they're not going to go to war against each other. The world is basically peaceful.

According to superstructure, the game is going to change. So we have 10 people in a low population, poor society. They're not going to date. What they're going to do is have sex with each other. Why? Because as a woman, the only way to ensure that your child survives is if all the men in the village want to protect and nurture the child. They will do that if they believe that the child could be theirs. So the woman will maybe have a husband, but she will also choose to sleep with other men to disguise paternity. So there's no dating — just lots and lots of sex in order to maintain social cohesion.

Now in superstructure number two, there's no dating either. Why? Because this society is in competition with other societies and they need to have as many children as possible. So the solution here is arranged marriages — who cares who you marry, just have lots and lots of kids. You marry who your parents tell you to marry. You marry your childhood best friend. You have lots and lots of kids.

Superstructure number three is the one we live in. Here you have a dating game. Why? Because the odds of you obtaining status are really, really low. And the only way that you can change your status is by marrying up. That's why you have a dating game. A dating game is an opportunity for you to find someone better than your social demographic circumstance can suggest. And that's why you have decreasing fertility rates, where over time because of the dating game, society will collapse.

So now you're the government and all around the world, women who are wealthy and well-educated are refusing to have children, especially in East Asia. Right now the fertility rate in China is about one. The replacement rate that you need is 2.1 — so just to maintain your current population levels, every woman in China needs to give birth to at least two kids. But right now on average, women are choosing to have one kid only in China. And the worst thing is that this trend is increasing.

So governments all around the world are trying to figure out: how do you convince women to have more kids? And what we've discovered is it's impossible. We can pay you more money like they do in South Korea — guess what, it doesn't work because people don't want money. They want status. And status is a zero-sum game. Money is infinite, but status and power are zero-sum. So when you have overpopulation, we have too many people competing for too few status positions, and you have decreasing fertility rates. And there's nothing you can do about it. The moment you give women choice, they choose to improve their lives by marrying someone better. And so over time what happens is your society collapses.

If you look at history, the best indicator that a society is about to collapse is if the women who are wealthy and well-educated refuse to have children. This is what happened to the Romans who collapsed. This is what's happening around the world today — in America, in Britain, in Europe, in China. And this tells us that society is collapsing.

So in other words, these superstructures tell us the life cycle of a civilization — when civilization is young, then it matures, it grows, and then it collapses. And if you look at history, all civilizations go through this process of birth, maturation, and then collapse. And there's no way around it.

So the power of game theory is that just by studying one aspect — just by studying this game, figuring out who the players are, the rules and the incentives — I can figure out what the superstructure of the civilization is. And then once I have these two, I can figure out where it came from and where it's going. That's what I want to teach you in this class: how to analyze a situation so you understand the players, the rules and incentives, which will give you insight into the superstructure so that you can figure out where it came from and then predict where it's going.

This is a map of the world. The color scheme is this: the red is where the society has an above-replacement fertility rate — above 2.1. If it's dark red like in the middle of Africa, it's six or above. And why is that the case? Because Africa is in a situation where it is a growing society with middling technology. So a lot of people die, lots of competition. So to survive, families have to give birth to a lot of kids. But then you move to North America, Europe, and East Asia — the three wealthiest parts of the world. And the fertility rate is collapsing because now we've entered the endgame where it is overpopulation, too much wealth, so too much inequality.

North America and Europe are kind of okay — why? Because of immigration. Even though their women are not having children, they can choose to import people for their labor force. But East Asia is really, really screwed. China is at one, but the worst is South Korea — South Korea has the lowest fertility rate in the world, between 0.6 and 0.8. They're probably gone in 50 years' time. It's so bad that when you go to South Korea, they have signs outside restaurants that say no dogs and no kids. They think that kids are a problem.

The solution governments are choosing right now is to import immigrants. And this is causing a lot of disruption in society because people don't like outsiders, people don't like immigrants. But they don't have a choice, because along with the fertility crisis is the aging crisis where your population is getting older and older.

If you want to know who will rule the world in 100 years' time, just figure out in which society do wealthy educated women choose to have children — and then that society will rule the world. Unfortunately if you do it that way, you get a really disturbing answer. This per capita GDP chart tells us how much people make. If you analyze how the game works objectively from a game theory perspective, you are forced to conclude that Israel right now has the major advantage over everyone else. Israel is the only wealthy, western, high-tech society in which women choose to have more than two kids.

Now it is possible that societies will change their fertility rate as the world changes. But given the current state of things, Israel's growth trajectory is very, very high. But then the question is: why is Israel different from everyone else? And the answer is because the world hates them. Because they think they are different from everyone else and they must unite together to survive. So in Israel, fertility is status. If you are a woman and you give birth to a lot of kids, that means that you love Israel, that means that you are doing what you can in this war for survival. It means you are a patriot.

What the West has done is not only create a dating game where women can choose not to have kids, but the Western world has also given up on religion and embraced materialism. What is valued in the West is not patriotism or love of family or religious duty — it's how many Instagram followers you have, how many YouTube subscribers you have, how much money you have. That's all that matters. So given the current state of events, it's very hard for the Western world and really for China to survive for the next 50 years.

South Korea is like the worst case scenario. Given current trends, by the year 2100 you have a situation where the vast majority of people are over 65 and you have no kids — a zombie society where no one works and everyone just walks around the park every day. The economy has collapsed. By the time you hit 2040 you have this huge dependency and a decreasing working population. By the time you hit 2060, your working population has decreased by half, by 50%. If things stay the same, South Korea will be dead by 2150 at best. But what we know from history is that societies will not die naturally — eventually South Korea will be forced into wars, new economic crises. And I would be surprised if South Korea were to not face collapse as a nation state by 2040.