Strategic Decision-Making: April 21
Title: Game Theory: The Art of Strategic Decision Making
Presented By: Dean Dudley, Ph.D., Associate
Professor of Economics at United States Military Academy, West Point.
Description: Game theory is the rigorous and methodical examination of strategic choice. It is useful to decision makers for two very important reasons. For the intuitive leader whose penetrating eye sees to the heart of a strategic choice arena, and through gut and instinct chooses a course of action that leads to success, game theory provides a tool to methodically explain to others the merit of that course of action. For the methodical leader who concentrates on doctrine and experience, game theory gives a tool to evaluate the potential success or failure of competing courses of action. All in all, game theory serves the decision-maker as an explanatory and as an evaluative tool. Both of these uses of game theory would be powerful tools for the military decision-maker.
The explanatory power of game theory in strategic choice arenas becomes even more important when we move away from the over-simplistic characterization of the battlefield as a game of chess, where the decision maker moves non-intelligent and non-cognizant military units as pawns across the board. If a decision-maker has human subordinates, it is possible that the intuitive course of action is seen by someone other than the decision-maker. Under this circumstance, the decision-maker must be persuaded that the intuitive course of action is actually the most advantageous course of action. Here, the framework of game theory reveals its power as an explanatory tool, as a superstructure upon which the skin of assumptions, of actors, of courses of action, and of interactive outcomes, can be hung. In short, game theory can be used to systematically explain the relevance of a particular course of action.
The second benefit of game theory is its evaluative use. In planning sessions, game theory can be used to lay out all the relevant courses of action available to actors in a strategic choice arena. The chosen courses of action come together in that arena to form interactive outcomes. These outcomes then have some value to all of the actors involved. Decision-makers with foresight will look ahead to the outcomes and evaluate which courses of action will give them the most favorable outcomes. The game theoretic structure is an excellent tool for systematically evaluating various courses of action with their associated interactive outcomes.
Learning Outcomes:
- Participants will be able to recognize and define what constitutes a game
- When is there a Game?
- What is a Game?
- Participants will be able to observe a sequential game and construct a formal model of this play game:
- How is a Sequential Game Constructed?
- How Does the Game Play Out?
- What Benefit Does this Type of Game Theory Give?
- Participants will be able to observe a simultaneous game and construct a formal model of this play game:
- How is a Simultaneous Game Constructed?
- How Does the Game Play Out?
- What Benefit Does this Type of Game Theory Give?
Extensions: Recognize the incentive structure within any game and understand how the incentives can be changed to generate more favorable equilibrium outcomes.
Biography: Senior Civilian Economist specializing in Game Theory, Microeconomic Theory and Non-linear Optimization. Finishing a book titled “Game Theory and the Art of War” and actively pursuing research in Military Manpower Issues.
RESEARCH INTERESTS
My current research focuses on military applications of game theory. Of particular interest is a theory of rational political extremism. The question then arises as to whether there can be rational explanations to extreme acts. From an economics perspective, can extremism, in particular can political extremism be the result of constrained optimization on well behaved preference sets? Using a simple spatial model of political participation, political rent seeking, imperfect information, and constrained optimization, a rational political extremist will emerge.
EDUCATION
Ph.D, Economics, Indiana University, Bloomington, IN; BA, Economics, Eastern Washington University, Cheney, WA.
TEACHING EXPERIENCE
Assistant Professor, Department of Social Sciences, United States Military Academy, West Point, NY; Aug. 1993 to present.
Adjunct Faculty, Graduate School of Business Administration, Mount St. Mary’s College, Newburgh, NY; Oct. 1997 to Present.
PUBLICATIONS
Dean Dudley, “Planning, Budgeting, and management” in American National Security, 7th edition, 2015.
Dean Dudley, “Issue 11 Free Trade” in Taking Sides: Clashing Views in American Foreign Policy, 6th edition, By Suzanne Nielsen , Scott Handler, McGraw-Hill, 2013.
Dean Dudley, “Using Credit Wisely” in Personal Financial Planning Guide for the Armed Forces, 7th edition, edited by Jamie Gayton and Scott Handler, Stackpole Books, 2012.
Dean Dudley, “Paying Your Taxes” in Personal Financial Planning Guide for the Armed Forces, 7th edition, edited by Jamie Gayton and Scott Handler, Stackpole Books, 2012.
Dean Dudley, “Meeting Medical Expenses” in Personal Financial Planning Guide for the Armed Forces, 7th edition, edited by Jamie Gayton and Scott Handler, Stackpole Books, 2012.
Dean Dudley, “Meeting Medical Expenses” in Armed Forces Guide to Personal Financial Planning, 6th edition, edited by Margaret Belknap and Michael Marty, Stackpole Books, 2007.
Steven Hackett, Dean Dudley, James Walker. “Heterogeneities, Information, and Conflict Resolution: Experimental Evidence.” in Local Commons and Global Interdependence: Heterogeneity and Cooperation in Two Domains, edited by Robert Keohane and Elinor Ostrom, Sage Publications, Jan. 1995.
Steven Hackett, Dean Dudley, James Walker. “Heterogeneities, Information, and Conflict Resolution: Experimental Evidence.” Journal of Theoretical Politics, Vol. 6, No. 4, Oct. 1994.
