… Through a combination of Game Theory, a genuinely mathematical theory, Computer Theory, and the current Theory of Evolution in Biology, a view has been developed that economics has processes of innovation analogous to processes that generate diversity in science. biosphere and its dynamics evolve according to the laws of Darwinism. From this perspective, the way economics creates wealth would be an evolutionary adaptive process. Here there seems to be a paradox that mathematics, in the field of equations, becomes useless since evolutionary processes are not equable. This is the theme we will study and share in our next columns with our readers.
Two priceless news
If the intricate incentive system for the creation of new ideas is underdeveloped, then society suffers from the general lack of progress as much as when those incentives are too abundant or too restricted.
Journalist David Warsh tells the story of Homo sapiens sapiens's explanation of wealth creation in a pleasant way. It is a pleasurable journalistic story of economic theories. Extremely simplifying the content of your book Knowledge and the wealth of nations: a story of economic discoverywe could say that economist Paul Romer was successful in mathematically describing the economic power of ideas.
To imagine at a single intuitive blow what it is about in Warsh's book, let's just mention the two striking examples from Microsoft and Google. Now immediately, therefore, we are seized by a foreboding that makes us hold our breath: Isn't our individual life a kind of economic agent that must survive and compete in the economy of social life? If brilliant economists understood with mathematical rigor the role of ideas in wealth creation, especially after the Industrial Revolution, what is the chance that we will come to understand, by analogy, the individual creation of quality of life for oneself?
In other words, countries improve their quality of life by creating wealth through the economy, and inventors' ideas are the crucial, though not the only, element of the creation process. Why wouldn't the role of an individual's ideas in creating their own quality of life be analogous?
The desire to study the means of living with quality is not new and it is impossible to compete with philosophical and religious systems. However, there may not be a traditional desire to understand with mathematical rigor the means of quality individual survival in society.
How would this be possible? If the suggested analogy makes sense, then we'll know where to start. We must consider individual ideas. They are the key to quality of life. Of course, this statement is trivial and needs no economic history as a reference to be sustained. However, what does not seem easy is to understand mathematically why ideas are the main resource for a quality life.
It should be remembered that, just as there is no point, straight and flat in nature, much less any fractal in Nature, there is nowhere in the Universe anywhere that is exactly the same as any mathematical game one might conceive. Why? Because in nature or in the universe the conditions are complex and impossible to capture perfectly by whatever theory conceived by Homo sapiens sapiens specimens.
Why, then, do we spend time on Game Theory? Because your exercise inspires us, excites our imagination and feeds our intuition about how could be the true reality. People who have invested heavily in theories of mathematics, physics, chemistry and economics, for example, have been reaping abundant riches, significantly improving their quality of life, even though they know that any theory is pure human imagination. Finally, because we think it's a fun way to pass the time and can help us improve our quality of life.
How then to start? Again, why not lend economists some of their methods?
The history of economic theories reveals a mathematical maturation toward Game Theory. This part of mathematics appears to be the most general method for inspiring and analyzing an economic system.
Why wouldn't it also be useful for us to try an analysis of our problem?
There is no way to know in advance whether this is a good project or not. However, we can try to justify it by anticipating the validity of our thesis. That is, assuming that the analysis of ideas is an immense source of pleasure, we are significantly improving the quality of life by examining whether they are good or should be discarded. Either way, the analysis exercise will probably be useful in any other situations where the brain is required.
So, imitating some economists, we will try to use Game Theory to understand why an individual's ideas are the key to their quality of life.
While we will explore this mathematical theory to improve our analytical skills, we will confront our problem directly without subterfuge and without delay.
When we think about quality of life, we imagine individual quality of life. The life of the individual is good or not. But what is “the life of the individual”? This, perhaps, is the most difficult problem of all human times and whose solution, in rational terms, seems impossible. This, however, does not prevent us from investigating what improves and what worsens "my individual life."
Intuitively, I know I'm alive and still living, but I don't know what "my life" is. I also suppose that I can distinguish what improves my life from what makes it worse.
I am therefore intuitively ready to begin a mathematical attempt to understand why my ideas are the key to the quality of my individual life.
There are numerous possible initial questions. We have to choose one, inevitably, to begin with. What are the things that could improve my life? We immediately realize that this question is far more difficult than: what are the things that threaten to make my life worse, or what are already affecting me negatively?
Immediately, we see progress in our analysis: the second question seems much easier than the first and, by the way, far more urgent. What's more, the second question is extremely useful because if we can know that X is bad and that X is lurking around to hinder me, then to avoid X is to prevent my life from getting worse.
Take an example for the first question. A good thing would be that I could buy a car and go to work listening to songs of my taste, always preserving the freshness of the morning shower and arriving at the workplace still smelling the soap. The difficulty is that I still have to work hard to raise the money needed for this. However, there is an even greater difficulty: today there is almost no more space for me to put my car on city streets. An example for the second question would be what are the difficulties I can avoid in getting to work?
Strategy s1. Slow traffic, bus, or train, overcrowded and self-polluting on the avenue could be avoided if I went to work much sooner than necessary. Similarly, if I left much later than allowed, I could avoid these problems. Returning home late may be unfeasible because the next day I have to leave very early and my life time with myself at home would be undesirable.
This first step, which emerged almost naturally, brings us to the famous MINIMAX strategy of mathematician John von Neumann. It is a huge step in strategic thinking. Not knowing how to improve, at least we should minimize the maximum damage. Hence the name minimax. With this denial strategy we can make great progress in researching our problem. We don't know which Y are good, but some X are clearly threatening and lurking; therefore, I should strive to avoid X. If I can, then I improve my quality of life, because I prevented it from getting worse by warding off threat X, that is, diminishing my losses and thus decreasing the maximum possible losses.
We note that the strategy of returning home later is often not feasible. Therefore, in order to minimize the harm of having to be out of the home, unable to cultivate my inner self and appropriate my life time, I make the decision to endure the discomfort and the displeasure, if not the pain, of returning home to the home. time when everyone makes the same decision. We have here an important situation for the mathematical analysis of individual life. There are always costs, bigger or smaller, that can be more or less painful to bear for everything we choose to do.
Then, of course, a fundamental question arises: Where do these inevitable costs come from?
Who, or what, imposes such costs on us?
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