The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future

Description

Bruce Bueno de Mesquita is a master of game theory, which is a fancy label for a simple idea: People compete, and they all the time do what they think is in their own best interest. Bueno de Mesquita uses game theory and its insights into human behavior to predict and even engineer political, financial, and personal events. His forecasts, which have been employed by everyone from the CIA to major business firms, have an amazing 90 percent accuracy rate, and in this dazzling and revelatory book he shares his startling methods and lets you play along in a range of high-stakes negotiations and conflicts.

Revealing the origins of game theory and the advances made by John Nash, the Nobel Prize—winning scientist perhaps best known from A Beautiful Mind, Bueno de Mesquita details the controversial and cold-eyed system of calculation that he has since created, one that allows individuals to think strategically about what their opponents want, how much they want it, and how they might react to every move. From there, Bueno de Mesquita games such events as the North Korean disarmament talks and the Middle East peace process and recalls, among other cases, how he correctly predicted which corporate clients of the Arthur Andersen accounting firm were most likely engaged in fraudulent activity (hint: one of them started with an E). And looking as ever to the future, Bueno de Mesquita also demonstrates how game theory can provide successful strategies to combat both global warming (instead of relying on empty regulations, make nations compete in technology) and terror (figure out exactly how much U.S. aid will make Pakistan fight the Taliban).

But as Bueno de Mesquita shows, game theory isn’t just for saving the world. It can help you in your own life, whether you need to succeed in a lawsuit (lawyers argue too much the merits of the case and question too little the motives of their opponents), elect the CEO of your company (change the system of voting on your board to be more advantageous to your candidate), or even buy a car (start by knowing exactly what you need, call every dealer in a fifty-mile radius, and negotiate only over the phone).

Savvy, provocative, and shockingly effective, The Predictioneer’s Game will change how you understand the world and manage your future. Life’s a game, and how you play is whether you win or lose.

From the Hardcover edition.
Book Description
Bruce Bueno de Mesquita is a master of game theory, which is a fancy label for a simple idea: People compete, and they all the time do what they think is in their own best interest. Bueno de Mesquita uses game theory and its insights into human behavior to predict and even engineer political, financial, and personal events. His forecasts, which have been employed by everyone from the CIA to major business firms, have an amazing 90 percent accuracy rate, and in this dazzling and revelatory book he shares his startling methods and lets you play along in a range of high-stakes negotiations and conflicts.

Revealing the origins of game theory and the advances made by John Nash, the Nobel Prize-winning scientist perhaps best known from A Beautiful Mind, Bueno de Mesquita details the controversial and cold-eyed system of calculation that he has since created, one that allows individuals to think strategically about what their opponents want, how much they want it, and how they might react to every move. From there, Bueno de Mesquita games such events as the North Korean disarmament talks and the Middle East peace process and recalls, among other cases, how he correctly predicted which corporate clients of the Arthur Andersen accounting firm were most likely engaged in fraudulent activity (hint: one of them started with an E). And looking as ever to the future, Bueno de Mesquita also demonstrates how game theory can provide successful strategies to combat both global warming (instead of relying on empty regulations, make nations compete in technology) and terror (figure out exactly how much U.S. aid will make Pakistan fight the Taliban).

But as Bueno de Mesquita shows, game theory isn’t just for saving the world. It can help you in your own life, whether you need to succeed in a lawsuit (lawyers argue too much the merits of the case and question too little the motives of their opponents), elect the CEO of your company (change the system of voting on your board to be more advantageous to your candidate), or even buy a car (start by knowing exactly what you need, call every dealer in a fifty-mile radius, and negotiate only over the phone).

Savvy, provocative, and shockingly effective, The Predictioneer’s Game will change how you understand the world and manage your future. Life’s a game, and how you play is whether you win or lose.

Knowing what is going to happen around the world can be awfully useful. Forewarned, after all, is forearmed, whether the questions of the day are about business, national security, or our day-to-day lives. The Predictioneer’s Game provides a reliable way to anticipate the future, one You’ll experiment by using the online version of the game’s program on my website. Suppose, for instance, you need to work out likely future developments in Iran. You’ll build a data set and test it just as I have done.

We all know that Iran’s Ayatollahs faced a pretty stiff challenge following that country’s June presidential election. As I predicted in February 2009. the Qum clerics, often referred to as the Quietists, are quiet no more and Iran’s Supreme Leader is facing the first real political challenge since Iran’s 1979 revolution. Iran is in for more challenging times in the months to come. You might wonder, what is likely to happen to relations between Iran’s and Iraq’s Shia-dominated governments now that the U.S. is withdrawing most of its forces from Iraq? How will the evolving relations between Iran and Iraq shape the interests of the United States in the region? These are one of the vital questions I try to answer in The Predictioneer’s Game.

I conclude that if the U.S. fully withdraws, then Iran and Iraq will form a strategic partnership and Iran might even intervene militarily on behalf of Iraq’s Shia government to put down a rising political threat from the pro-Baathist, anti-American, Sunni Vice President of Iraq, Tariq al-Hashimi. Hashimi’s power is predicted to increase markedly even as Prime Minister Maliki’s declines if President Obama decides not to maintain 50,000 American troops in Iraq. If, then again, he chooses to keep 50,000 or more troops in Iraq after August 2010, then Iran and Iraq will not forge a strategic alliance, Hashimi’s growing power will be contained, and Maliki will remain in charge. And in Iran, Ayatollah Khamenei’s power will continue to decline even as the military, the moneyed interests and the Qum clerics will become the backbone of a more moderate, more pragmatic Iranian regime.

Predicting the future–whether you are concerned about Iran or about how best to settle a family crisis–is not all that mysterious. If people do what they think is best for themselves–and who doesn’t–then, with game theory’s help, we will anticipate what they are going to do. Working out other people’s incentives means also working out how altering their costs or benefits can be used to change their behavior and that, after all, is the essence of predictioneering.–Bruce Bueno de Mesquita