WEBVTT - How Trump is Getting the Game Theory Wrong 0:00:15.604 --> 0:00:28.164 Pushkin. Welcome back to Risky Business, a show about making 0:00:28.244 --> 0:00:30.684 better decisions. I'm Maria Kanikova. 0:00:30.324 --> 0:00:32.884 And I'm Nate Silver. Today on the show, we'll talk 0:00:32.924 --> 0:00:36.044 about the markets and how they're reacting to recent actions 0:00:36.044 --> 0:00:38.204 by President Trump. I you know, I'll just say this much. 0:00:38.244 --> 0:00:41.044 You know, I think that Cayman Islands bungalow I was 0:00:41.084 --> 0:00:44.204 hoping to buy has been undermined by the recent performance 0:00:44.244 --> 0:00:44.764 my Furrow and. 0:00:44.804 --> 0:00:47.444 K On a brighter side, Nate, you might have a 0:00:47.524 --> 0:00:49.924 chance to go to an island off the coast of 0:00:49.964 --> 0:00:53.284 Mexico because after that we'll be talking about the return 0:00:53.404 --> 0:00:57.044 of Billy McFarland and Fire Festival Take two. 0:00:57.404 --> 0:00:58.884 Can we pause the show so I can book my 0:00:58.924 --> 0:00:59.644 ticket right now? 0:00:59.844 --> 0:01:00.364 Let's do it. 0:01:01.964 --> 0:01:04.284 We're back. I have a I have a one way 0:01:04.324 --> 0:01:06.044 I I just want to stay there. I don't even 0:01:06.044 --> 0:01:08.604 want took a return flight. It's yeah, So we're now. 0:01:08.644 --> 0:01:11.484 I'm were now all a good gun prepared for Fire 0:01:11.524 --> 0:01:13.564 Festival too, And let's talk on a little bit of 0:01:13.884 --> 0:01:19.124 markets first. 0:01:19.844 --> 0:01:23.924 So right now, as we are recording this, it is Tuesday, 0:01:24.124 --> 0:01:27.724 March fourth, and I'm saying that because Nate, you and 0:01:27.764 --> 0:01:29.964 I have both seen I mean the world has seen 0:01:30.204 --> 0:01:33.964 that economic news in this administration changes very quickly, so 0:01:34.004 --> 0:01:38.004 it's very important to put this in context. So today, Tuesday, 0:01:38.844 --> 0:01:42.764 Trump has announced tariffs twenty five percent across the board 0:01:42.884 --> 0:01:47.324 against Canada and Mexico, ten percent against China. Canada and 0:01:47.444 --> 0:01:51.324 China have announced their own retaliatory tariffs. The markets are 0:01:51.604 --> 0:01:54.804 not happy. Let's talk about what is going on in 0:01:54.804 --> 0:01:57.764 people's heads kind of what is the decision calculus behind this? 0:01:58.204 --> 0:02:03.204 Yeah, I mean it seems like markets are reacting negatively, 0:02:03.284 --> 0:02:05.804 which is perhaps pretty reasonable. I mean, there are various 0:02:05.804 --> 0:02:10.644 things going on, right, markets like we don't have a 0:02:10.684 --> 0:02:12.404 lot of that. I mean, you know, the stock market 0:02:12.444 --> 0:02:15.244 is not the economy, right. I think the stock market 0:02:15.404 --> 0:02:18.004 sometimes is a better measure of economic vibes, and it's 0:02:18.004 --> 0:02:21.564 a bit mixed. And if you survey, look at surveys 0:02:21.724 --> 0:02:26.044 of hiring managers and CEOs, I mean they're generally pretty 0:02:26.044 --> 0:02:30.844 bullish on Trump. That's one of his bigger constituencies. But yeah, Look, 0:02:31.324 --> 0:02:35.364 according to Polymarket, which I'm an advisor, there is now 0:02:35.364 --> 0:02:39.244 a thirty eight percent chance of a United States recession 0:02:39.964 --> 0:02:42.844 this year in twenty twenty five. That's way up in 0:02:42.924 --> 0:02:46.324 recent days. It had been twenty two percent, which is 0:02:46.404 --> 0:02:48.364 kind of a base rate about one in five years. 0:02:48.724 --> 0:02:50.724 You go into a recesion. The economy can't be forecasted 0:02:50.804 --> 0:02:54.644 very well more than about six months in advance, but 0:02:54.764 --> 0:02:57.204 roughly double to almost forty percent as a result of 0:02:57.804 --> 0:03:01.724 the terriffs, as a result of some consumer sentiment data, 0:03:01.804 --> 0:03:04.124 consumers who do not like the Joe Biden economy. According 0:03:04.124 --> 0:03:07.084 to the University of Michigan's Consumer Sentiment Index, it's now 0:03:07.164 --> 0:03:09.924 worse than it was last year, which was bad enough 0:03:09.924 --> 0:03:13.444 to get Biden out in Democrats. I guess Kamala Harris 0:03:13.444 --> 0:03:18.124 eventually ousted from office. So people are reacting to this 0:03:19.244 --> 0:03:21.924 on different loves of the economy, right, and the goodwill 0:03:21.964 --> 0:03:25.724 that Trump has built up with Wall Street types. I think, 0:03:26.124 --> 0:03:28.684 you know, look, maybe there's some naive tea about people 0:03:28.724 --> 0:03:30.764 thinking they have a tear navi ta. I don't know 0:03:31.284 --> 0:03:37.844 about people, but it's a fancy word. But like people 0:03:37.884 --> 0:03:40.484 were on Wall Street where I think naive about the 0:03:40.524 --> 0:03:42.164 fact that like a, I mean, Trump is a guy 0:03:42.244 --> 0:03:46.604 who I'm not sure you'd always say that he does 0:03:46.684 --> 0:03:48.884 what he says he's gonna do, but like he's pretty 0:03:49.084 --> 0:03:52.404 literal about things. There's some decoding and he said, yeah, 0:03:52.404 --> 0:03:55.124 I'm going to have tariffs and kinda a Mexaco beat 0:03:55.164 --> 0:03:57.644 up the kids and if if they'll give me their 0:03:57.684 --> 0:04:01.844 lunch money. And so the other countries are not happy 0:04:01.884 --> 0:04:03.804 about all of this. By the way, we mentioned this 0:04:03.884 --> 0:04:08.284 last week. Friedrich Mertz, the new German chancellor elect, was like, 0:04:08.284 --> 0:04:10.964 I don't want have anything to do with the US anymore. Right, 0:04:11.004 --> 0:04:13.524 that seemed bad to me too. So other countries are 0:04:13.644 --> 0:04:19.044 noticing the domestic politics of you know, giving the bowl 0:04:19.084 --> 0:04:21.724 of your lunch money, so the different levels of this. 0:04:21.764 --> 0:04:23.164 But nobody likes this phenomenon. 0:04:23.564 --> 0:04:26.444 No nobody likes this phenomenon. And I think the markets 0:04:26.484 --> 0:04:29.924 have you know, it's very funny because the markets, I 0:04:29.924 --> 0:04:34.404 think are yo yoing much more than usual because of 0:04:34.444 --> 0:04:36.844 the uncertainty and no one knows, you know, what the 0:04:36.884 --> 0:04:39.324 hell's going to happen, what Trump is actually going to do, 0:04:39.404 --> 0:04:42.444 because they really after the initial right, you remember they 0:04:42.484 --> 0:04:46.204 went down when back in February when Trump was saying, oh, 0:04:46.204 --> 0:04:48.644 We're going to have tariffs, and then they like rallied 0:04:48.684 --> 0:04:50.964 and they more than rallied. They went crazy right when 0:04:51.564 --> 0:04:54.124 it was like, oh right, we always knew that they 0:04:54.164 --> 0:04:57.004 were going to not you know, not have the tariffs. 0:04:57.164 --> 0:04:59.204 They want to believe, right, Like I think that there's 0:04:59.244 --> 0:05:01.564 this market they want to believe in Trump. It's kind 0:05:01.564 --> 0:05:03.764 of what you were saying that Wall Street has been 0:05:03.844 --> 0:05:06.124 on his side and they want the markets to rally, 0:05:06.244 --> 0:05:08.604 and so they've taken every excuse to try to rally. 0:05:08.804 --> 0:05:11.324 And now it was like, oh shit, right the tariffs 0:05:11.364 --> 0:05:14.604 are actually being implemented, and he said they're like done. Right, 0:05:15.004 --> 0:05:17.604 we've implemented the tariffs. That trade war has started. And 0:05:17.684 --> 0:05:19.444 part of me is like, guys, like you should have 0:05:19.484 --> 0:05:22.004 foreseen this, right, this should have been built in. You 0:05:22.004 --> 0:05:24.404 should have you should have known this was coming. So 0:05:24.524 --> 0:05:27.884 now we're seeing this huge correction. Actually NATTEK isn't a 0:05:27.884 --> 0:05:32.724 correction by the technical sense, so we've officially entered a correction. 0:05:33.244 --> 0:05:35.924 And the you know, the reason this is happening, I 0:05:35.964 --> 0:05:38.124 think is because of this disconnect. Right, you want to 0:05:38.124 --> 0:05:40.804 believe in Trump and then he does something like this 0:05:40.884 --> 0:05:42.724 and you're like oops, shit, Like he said he was 0:05:42.724 --> 0:05:44.284 going to do it and then he actually did it. 0:05:44.524 --> 0:05:47.284 He didn't listen to reason because I think that people 0:05:47.484 --> 0:05:50.964 misunderstand that he's actually going to kind of listened to advisors. 0:05:50.964 --> 0:05:53.204 Listen to this and realize this is not the good 0:05:53.204 --> 0:05:55.484 thing that you think it is for the economy. Right. 0:05:55.644 --> 0:05:57.764 Inflation is going to go up, Prices are going to 0:05:57.804 --> 0:06:00.684 go up. Uh, Tariffs on China not a good thing 0:06:01.044 --> 0:06:04.004 because prices are going to go up, you know, are 0:06:04.124 --> 0:06:06.604 our exports are going to suffer? There's there are so 0:06:06.724 --> 0:06:10.724 many downstream effects and people and saying, oh, he'll understand, 0:06:10.724 --> 0:06:12.244 and he won't actually do it, but he did it. 0:06:12.604 --> 0:06:17.004 I think a broader point, though, is that I actually, like, 0:06:17.364 --> 0:06:21.604 I think that Trump is misunderstanding kind of the game 0:06:21.644 --> 0:06:24.524 theory of what he's doing. So fundamentally, you know, we 0:06:24.564 --> 0:06:27.724 talk about game theory a lot on this show. Fundamentally, 0:06:27.724 --> 0:06:31.684 what you want is, you know, you need in order 0:06:31.724 --> 0:06:33.644 to figure out the game and the strategy, you need 0:06:33.644 --> 0:06:36.004 to figure out what the payoff matrix is, right, Like 0:06:36.044 --> 0:06:38.684 that's number one, right, Like to know what game we're playing, 0:06:38.684 --> 0:06:40.724 you need to figure out, Okay, what are the payoffs? Right? 0:06:41.084 --> 0:06:43.564 What's the structure of the game, to figure out what 0:06:43.644 --> 0:06:45.644 quadrant do I want to land and what do I 0:06:45.684 --> 0:06:48.444 want to do? What do I want my policy to 0:06:48.684 --> 0:06:53.044 actually accomplish? And in everything, So I think the economy 0:06:53.084 --> 0:06:56.004 is part of this. But we're seeing this with just 0:06:56.444 --> 0:06:59.804 Trump's America First policy in general, with him kind of 0:06:59.964 --> 0:07:03.404 burning alliances, with the you know, outrageous way that he 0:07:03.604 --> 0:07:08.644 behaved towards Zelonsky, like going back on US promises basically 0:07:08.724 --> 0:07:12.124 just bridges left and right and saying we don't need allies. 0:07:12.604 --> 0:07:14.284 He's behaving as if, oh, we don't need we don't 0:07:14.324 --> 0:07:16.524 need Europe, we don't need China, we don't need Canada, 0:07:16.524 --> 0:07:19.084 we don't need Mexico, like America can do this alone. 0:07:19.524 --> 0:07:22.604 And I think that it's a misunderstanding of the payoff matrix. 0:07:22.924 --> 0:07:26.964 I think that he actually doesn't understand that something that 0:07:27.884 --> 0:07:31.284 all Republican presidents have understood up until this point, which 0:07:31.324 --> 0:07:34.964 is that America First, you need the alliances in order 0:07:35.004 --> 0:07:38.204 for you know, security and American prosperity, that you actually 0:07:38.204 --> 0:07:41.244 can't go it alone and that you have you know 0:07:41.404 --> 0:07:45.044 that that's a fundamental miscalculation of the game that you're playing. 0:07:45.644 --> 0:07:47.364 And he thinks that, you know, if I, if I 0:07:47.404 --> 0:07:49.964 try to bully everyone, then all of a sudden, you know, 0:07:50.004 --> 0:07:51.644 I'm going to be kind of king of the world. 0:07:51.644 --> 0:07:53.524 And that's not the way that it works. That's not 0:07:53.604 --> 0:07:56.324 the way that people respond, and I think that he's 0:07:56.364 --> 0:07:59.964 going to end up in the wrong quadrant, and unfortunately, 0:08:00.004 --> 0:08:03.364 you know, America with him. While while these policies are 0:08:03.404 --> 0:08:06.684 in place, and you'll see that in economic blowback, you'll 0:08:06.684 --> 0:08:09.044 see that, in political blowback, you'll see that probably in 0:08:09.084 --> 0:08:12.644 a recent session. You'll see all sorts of downstream effects 0:08:12.644 --> 0:08:16.764 of these policies that I don't think. I certainly can't 0:08:16.764 --> 0:08:19.764 even begin to imagine what that's going to look like. 0:08:20.164 --> 0:08:23.444 But it does come from this misunderstanding of what truly 0:08:23.564 --> 0:08:26.284 America first would mean. Right, What do you need in 0:08:26.404 --> 0:08:30.004 order for in order to get into the quadrant where 0:08:30.044 --> 0:08:32.884 America is doing well? And thinking that you can do 0:08:32.924 --> 0:08:34.964 it by yourself by burning out bridges is wrong. 0:08:35.524 --> 0:08:41.484 We're not asking Trump to put anyone other than America first, right, 0:08:41.724 --> 0:08:44.564 We're saying that, like Trump's first, of all, a lot 0:08:44.564 --> 0:08:47.444 of people is misunderstanding. Right. They assume that game theory 0:08:47.484 --> 0:08:49.684 only applies to zero some games, And I guess it's 0:08:49.724 --> 0:08:53.604 narrowly to the first problems in game theory concern primarily 0:08:53.684 --> 0:08:56.244 zero some games. But most games are cooperative games or 0:08:56.244 --> 0:08:59.724 they're mixed games, right where they're positive. Some we have 0:08:59.884 --> 0:09:04.604 if you and I are like negotiating together a contract. 0:09:04.684 --> 0:09:08.364 Let's say a sponsor wanted to sponsor the show, but 0:09:08.404 --> 0:09:12.084 they want to negotiate with us like individually, and they 0:09:12.164 --> 0:09:15.284 had like a fixed pool of money. Right, so we 0:09:15.404 --> 0:09:20.684 both have cooperative and adversarial incentives. You know. On the 0:09:20.724 --> 0:09:22.484 one hand, we both lose if we do you know, 0:09:22.564 --> 0:09:24.564 let's do some ad really in the show, right, we 0:09:24.684 --> 0:09:28.164 both lose if the deal breaks up because we can't 0:09:28.164 --> 0:09:29.684 come to an agreement. The other hand, we might have 0:09:29.724 --> 0:09:31.564 some trade off between what you want and what I want. 0:09:31.564 --> 0:09:34.604 You know. Most games are kind of more like that, right, 0:09:34.644 --> 0:09:37.484 And like the game of like international trade. If my 0:09:37.564 --> 0:09:42.564 country manufactures autos really well and your country has really 0:09:42.644 --> 0:09:47.244 nice coffee beans, just based on the factors of production 0:09:47.324 --> 0:09:50.484 in our respective markets. Like you know, if I'm shitty 0:09:50.524 --> 0:09:52.924 at making coffee, what country is bad at making coffee? 0:09:53.204 --> 0:09:56.244 Who's bad at making coffe? I mean, let's put Germany. 0:09:56.324 --> 0:09:58.564 There's I don't think there's a second that Germany does 0:09:58.604 --> 0:10:00.924 not grow coffee, And I don't think that's ny. 0:10:01.204 --> 0:10:06.404 Good at cars, bad at coffee. There you go, Yeah, 0:10:06.404 --> 0:10:08.164 the German. You don't want the Germans to make their 0:10:08.204 --> 0:10:10.084 own coffee of their own have you ever fucking like 0:10:10.884 --> 0:10:13.724 tacos in Germany? It's a disaster, right, we want Germany 0:10:13.764 --> 0:10:18.044 to import coffee and tacos and Zell pharmaceutical shit, and 0:10:18.124 --> 0:10:21.364 like cars and watches and all the things that Germans 0:10:21.364 --> 0:10:25.204 are you know, pillsner We want trade, right. That actually 0:10:25.244 --> 0:10:27.084 is not zero sum, even in the prisoner's lembit. The 0:10:27.124 --> 0:10:29.684 most famous problem in game theory is actually about what 0:10:29.724 --> 0:10:32.764 happens when people cannot cooperate and they behave zero some 0:10:32.884 --> 0:10:34.164 because I think they're gonna be cheated. 0:10:34.404 --> 0:10:37.364 Yep, exactly exactly. I think that's also a misunderstanding of 0:10:37.364 --> 0:10:39.604 the prisoner's dilemma. And by the way, game theory and 0:10:39.644 --> 0:10:41.844 we talk about the game the Prisoner's Dilemma a lot 0:10:41.844 --> 0:10:44.404 because that's kind of the most famous game, but game 0:10:44.404 --> 0:10:47.164 theory is not just the prisoner's dilemma. Right, So many 0:10:47.204 --> 0:10:49.844 people just think that, oh, game theory, prisoner's dilemma. No, 0:10:50.004 --> 0:10:53.164 there's so many coordination games. There's so many you know, 0:10:53.204 --> 0:10:56.164 there's so many different games at play here. And you 0:10:56.164 --> 0:10:59.284 know what what Thomas Schulling could have got the Nobel 0:10:59.364 --> 0:11:03.084 Prize for was describing that, you know, all of these 0:11:03.124 --> 0:11:07.484 strategies are incredibly nuanced, and that you're like the madman's 0:11:07.484 --> 0:11:11.444 strategy is you know what happens when you act like 0:11:11.524 --> 0:11:14.924 a madman? Literally that you know you could You're capable 0:11:15.044 --> 0:11:19.644 of doing anything like sure, I'll rip out my steering 0:11:19.684 --> 0:11:23.724 wheel so that I can't actually have my car veer 0:11:23.764 --> 0:11:26.604 off course and I have to go straight. Sure I'm 0:11:26.644 --> 0:11:30.044 going to drop the nukes. I could do anything. You know, 0:11:30.164 --> 0:11:33.164 it might work in a very very limited scenario, but 0:11:33.204 --> 0:11:36.284 it can also lead to the end of the world. 0:11:36.364 --> 0:11:39.004 And it's not a good strategy, right, Like, at the 0:11:39.084 --> 0:11:41.964 end of the day, that's not how you're going to 0:11:42.004 --> 0:11:44.164 accomplish your goals. That's not how you're going to put 0:11:44.244 --> 0:11:48.404 yourself in the winning position. And so I would even argue, like, 0:11:48.404 --> 0:11:51.044 like you said, we're not saying put anyone but America first, Like, 0:11:51.444 --> 0:11:55.244 in order for America to prosper, you need to coordinate, 0:11:55.324 --> 0:11:58.724 you need to cooperate, you need to forge alliances, like 0:11:58.764 --> 0:12:00.804 that is the backbone of the global order. And that's 0:12:00.844 --> 0:12:03.724 why America has been doing so well because it has 0:12:04.204 --> 0:12:07.364 had this sort of kind of benign influence and people 0:12:07.484 --> 0:12:10.644 have built up goodwill and that evaporates in a second, 0:12:10.924 --> 0:12:13.924 and then what happens, right, what happens when you try 0:12:14.004 --> 0:12:16.684 to be kind of the bully and the person who says, 0:12:16.684 --> 0:12:20.564 you know, do what I say or else, and people realize, oh, 0:12:20.564 --> 0:12:23.604 we can't trust you. Right now, you're actually forcing people 0:12:23.644 --> 0:12:26.324 into exactly what you said with the prisoner's dilemma, where 0:12:26.324 --> 0:12:29.284 it's in both people's interests to try to coordinate, but 0:12:29.324 --> 0:12:31.244 you can't because you think that you're going to be cheated. 0:12:31.764 --> 0:12:35.324 You think that you cannot Actually you're not talking with 0:12:35.404 --> 0:12:38.724 a reliable partner. I mean, that's everything. We're also in 0:12:38.764 --> 0:12:41.164 a repeated game, right, this is not a one shot game. 0:12:41.524 --> 0:12:45.284 This is the global order. It's like repeated game. Reputation matters. 0:12:45.524 --> 0:12:48.084 Reputation is crucial when you're playing a repeated game. 0:12:48.964 --> 0:12:52.524 Yeah, and if you look at like empirical deviations from 0:12:52.564 --> 0:12:54.604 game theory, or maybe they're kind of like rational like 0:12:54.684 --> 0:12:59.804 on a deeper level, Right, there are two primary characteristics, 0:12:59.844 --> 0:13:04.324 which is that at first, people are actually more cooperative 0:13:04.324 --> 0:13:07.844 in the prisoner's dilemma than game theory might predict. Right, 0:13:07.924 --> 0:13:11.044 they kind of assume, hey, without an explicit coordination, that 0:13:11.204 --> 0:13:15.004 we're all shared humanity and these people are probably gonna 0:13:15.244 --> 0:13:19.124 help a stranger out as a default maybe, right, But 0:13:19.164 --> 0:13:22.484 then when they feel betrayed, people really seek revenge, And 0:13:22.524 --> 0:13:24.324 you could argue it's rational over to some very long 0:13:24.404 --> 0:13:27.084 run period because that like if you seek revenge, even 0:13:27.204 --> 0:13:30.244 to your own destruction, then people will be much more 0:13:30.244 --> 0:13:33.124 reluctant to fuck with you. But revenge seeking seems to 0:13:33.164 --> 0:13:36.964 be like very ingrained. And also like I've been trying 0:13:36.964 --> 0:13:42.324 to think about like the analogy of Canada and Mexico 0:13:42.444 --> 0:13:44.684 and what position they're in, and like, yeah, you can 0:13:44.764 --> 0:13:49.164 use anology of like they are are the bullies, but 0:13:49.244 --> 0:13:53.524 it's like more like, uh, they get it both ways though, right. 0:13:53.804 --> 0:13:55.804 They now just more like maybe you have like a boss. 0:13:56.324 --> 0:13:59.564 There's a little bit of sexual harassing here and there, right, 0:14:00.884 --> 0:14:04.764 and you're like, well, do I want to like blow 0:14:04.844 --> 0:14:07.244 up my employment or cause a whole controversy by pointing 0:14:07.244 --> 0:14:12.004 out that this is inappropriate conduct? Right? But also like 0:14:12.884 --> 0:14:15.884 maybe they're like coworkers are like super concerned about this 0:14:15.964 --> 0:14:17.924 kind of thing, right, And the coworkers say, if you 0:14:18.004 --> 0:14:19.644 all sent er to the boss, we're going to disown 0:14:19.684 --> 0:14:22.724 you and ostracize you. So like you have like they're 0:14:22.724 --> 0:14:25.044 really kind of not in a good position either way. 0:14:25.044 --> 0:14:27.484 It's talking about kind of tacklating with the least worst outcomes. 0:14:27.524 --> 0:14:29.564 This is not a good thing for Canada in Mexico. 0:14:29.604 --> 0:14:32.444 It makes all their options worse. By the way, some 0:14:32.484 --> 0:14:34.684 of the reason why the bullying, well he is bullying 0:14:34.724 --> 0:14:37.484 them is because like Canadian and Mexican imports are like 0:14:37.604 --> 0:14:41.884 two percent of US GDP each, like one and a 0:14:41.924 --> 0:14:44.124 half percent or something. We make a lot of our 0:14:44.124 --> 0:14:46.164 own stuff, where a big country of other trading partners, 0:14:46.164 --> 0:14:48.004 although that many of them are also under terrorists or 0:14:48.044 --> 0:14:51.404 threat of teriffs. But you know, if we had to 0:14:51.484 --> 0:14:55.124 go it alone, it might be enough to put economy 0:14:55.124 --> 0:14:57.484 into a recession. But like for mexicoor Canada, if you 0:14:57.564 --> 0:14:59.804 shut off the borders, it would send them to a 0:14:59.924 --> 0:15:02.844 profound crisis. There might be spill over effects. But we 0:15:03.164 --> 0:15:08.804 are the more powerful entity in this scenario. But still yeah, 0:15:08.844 --> 0:15:12.844 even in poke, the big stack doesn't want to know. 0:15:12.964 --> 0:15:15.724 The big scessarily antagonize the short stack, and even the 0:15:15.764 --> 0:15:19.284 big stack would rather not get into unnecessary confrontations. 0:15:19.404 --> 0:15:23.044 Absolutely, and if the big stack misplays that, so a 0:15:23.124 --> 0:15:25.244 lot of people once they get a big stack, they 0:15:25.404 --> 0:15:27.404 just they think that you're supposed to bully everyone right, 0:15:27.444 --> 0:15:30.444 you're supposed to raise every hand, especially if you're getting 0:15:30.484 --> 0:15:32.404 if you're on the bubble, which is the money point 0:15:32.404 --> 0:15:35.484 of the poker tournament or the final table, you know, 0:15:35.564 --> 0:15:38.004 they just go crazy and that's how they bust and 0:15:38.084 --> 0:15:41.724 lose their big stack, right, because people start seeing what 0:15:41.804 --> 0:15:44.324 they're doing, they start fighting back, And small stacks have 0:15:44.404 --> 0:15:46.964 a ton of power, right because if you are a 0:15:47.004 --> 0:15:50.164 big stack who's constantly opening, and I have, say ten 0:15:50.244 --> 0:15:54.404 big blinds, I can shove on you. And if you're 0:15:54.604 --> 0:15:57.004 you know, once that happens a few times, you either 0:15:57.084 --> 0:15:59.404 have to fold right and there goes two big blinds 0:15:59.484 --> 0:16:01.684 or however much you raised, or you call me and 0:16:02.084 --> 0:16:04.564 I actually have a hand, and you lose ten big blinds, right, 0:16:04.644 --> 0:16:06.844 and now I'm suddenly a twenty big blind stack. And 0:16:06.964 --> 0:16:09.084 this can happen over and over. And I've actually seen 0:16:09.564 --> 0:16:13.524 really big stacks just dwindle instead of becoming big when 0:16:13.924 --> 0:16:17.284 people realize that, oh, hey, I can push back here, right, 0:16:17.404 --> 0:16:22.244 I have a perfectly sized amount of chips to actually 0:16:22.484 --> 0:16:25.524 really be in a position to fight back because I 0:16:25.604 --> 0:16:27.884 can hurt you. And instead of a chip leader, you're 0:16:27.924 --> 0:16:29.884 going to go to medium sized stack. 0:16:30.004 --> 0:16:30.084 Ye. 0:16:30.284 --> 0:16:33.404 But yeah, no's that's a very big misconception. And just 0:16:33.484 --> 0:16:35.724 to go back to what you were saying a little bit, 0:16:35.964 --> 0:16:38.124 you were talking about the evolutionary sec of game theory, 0:16:38.364 --> 0:16:41.404 but there's actually also just some you know, straight up 0:16:41.604 --> 0:16:45.164 history of game theory when computers and different strategies were 0:16:45.204 --> 0:16:47.004 set up against each other to try to figure out, 0:16:47.044 --> 0:16:49.964 you know, what does the best. And first the first 0:16:50.004 --> 0:16:52.524 strategy that ended up doing well. So this goes back 0:16:52.564 --> 0:16:55.324 to your kind of retaliatory thing is tit for tat? Right, 0:16:55.684 --> 0:16:58.684 So you start off cooperating and if you know, if 0:16:58.764 --> 0:17:01.724 the other person cooperates, you're in a cooperative loop, right, 0:17:01.844 --> 0:17:05.244 So you end up in this cooperative loop. Everyone's great. 0:17:05.524 --> 0:17:08.124 If they stop, then tit for tat, right, So if 0:17:08.164 --> 0:17:11.284 they defect, then you start to affecting, and all of 0:17:11.324 --> 0:17:13.924 a sudden, you know you're in a tit for tat strategy. 0:17:14.884 --> 0:17:17.484 You're you're no longer in a cooperative roof. So that 0:17:17.604 --> 0:17:21.764 strategy one and then another strategy beat it, and that 0:17:22.044 --> 0:17:25.364 strategy was instead of tit for tat, tit for two tats. 0:17:25.644 --> 0:17:28.964 So basically, you you let that harassment go on a 0:17:29.004 --> 0:17:31.284 little bit, right, you give them a shot, So you 0:17:31.364 --> 0:17:35.164 don't affect immediately. You actually kind of wait because what 0:17:35.284 --> 0:17:37.724 if that defection was a mistake, right, what if there 0:17:37.924 --> 0:17:40.764 was what if there was something else going on? What 0:17:40.884 --> 0:17:44.044 if you know, the person got distracted. Let's give people 0:17:44.804 --> 0:17:47.004 a better shot and tit for two tats ended up 0:17:47.004 --> 0:17:49.804 being the winning strategy, so that that was kind of 0:17:49.924 --> 0:17:54.284 the the thing that beat everyone, and you know, but 0:17:54.644 --> 0:17:57.964 clearly like at this point, we're not in that anymore 0:17:58.004 --> 0:18:00.164 because at some point you do have to retaliate and 0:18:01.124 --> 0:18:04.284 you're out of the cooperative spiral, and those strategies, by 0:18:04.324 --> 0:18:06.764 the way, do a lot worse, right, So those those 0:18:06.804 --> 0:18:11.324 are not winning strategies. So it's I think that's kind. 0:18:11.204 --> 0:18:15.844 Of where we are. And we'll be right back after 0:18:15.924 --> 0:18:16.564 this break. 0:18:27.084 --> 0:18:29.844 When you're talking about human nature. The other games that 0:18:29.924 --> 0:18:32.324 we should just talk about a little bit. There's a 0:18:32.484 --> 0:18:35.524 lot of work that's been done on things like the 0:18:35.604 --> 0:18:36.324 Dictator game. 0:18:36.644 --> 0:18:36.764 Right. 0:18:36.804 --> 0:18:39.524 The Dictator games say I have ten points, Nate, and 0:18:40.084 --> 0:18:44.124 I get to award them between you and me, and 0:18:44.324 --> 0:18:48.564 I can take all ten for myself, right, And people 0:18:48.644 --> 0:18:51.404 don't do that. People are actually and I can take 0:18:51.444 --> 0:18:53.124 eight for myself and give you two, or I can 0:18:53.204 --> 0:18:55.524 be like, oh, o get right, I'll take seven for myself. 0:18:55.924 --> 0:18:58.844 Final I'll give you three. But people end up being 0:18:59.204 --> 0:19:03.604 much more fair than you know, game theory would would predict, 0:19:04.084 --> 0:19:07.124 just in a pure self interested way. People end up, 0:19:07.444 --> 0:19:11.564 you know, giving pretty equitable divisions. It's actually very close 0:19:11.684 --> 0:19:14.404 to like, Okay, i'll give you half and I'll keep half, 0:19:14.484 --> 0:19:17.524 because you know we're we're not monsters, and people are 0:19:17.564 --> 0:19:21.404 actually pretty generous in those types of situations, and especially 0:19:21.404 --> 0:19:25.124 if this is a repeat game, reputation repeat interactions are 0:19:25.324 --> 0:19:27.084 our first impulses, and to be like, I'm going to 0:19:27.124 --> 0:19:29.124 take it all for myself, even if I don't know 0:19:29.204 --> 0:19:31.124 that I'm going to be playing with you, because I 0:19:31.164 --> 0:19:33.324 also think that it's reputation in your own head, right, 0:19:33.404 --> 0:19:34.964 you don't want to be you don't want to think 0:19:35.004 --> 0:19:37.124 of yourself as the type of person who's going to 0:19:37.164 --> 0:19:40.484 take all ten points for themselves and you know, just 0:19:40.564 --> 0:19:43.484 screw the other, the other person in this interaction. So 0:19:43.604 --> 0:19:46.044 I think we have there are some really interesting findings 0:19:46.124 --> 0:19:49.684 from those kinds of games where you see that, you know, 0:19:49.764 --> 0:19:53.444 people's tendencies tend to be much nicer. But I think 0:19:53.484 --> 0:19:57.724 Trump would take ten and give you zero and say 0:19:57.764 --> 0:20:00.684 that that serves his long term interest, not realizing that 0:20:00.764 --> 0:20:03.364 that's going to piss you off. Right, You're not going 0:20:03.404 --> 0:20:05.204 to be happy when you get zero. You're not going 0:20:05.244 --> 0:20:06.884 to be happy when you get when he's like, okay, fine, 0:20:06.924 --> 0:20:09.244 you can have one, right, Like, you are also now 0:20:09.444 --> 0:20:11.164 going to be happy in that scenario, and that's going 0:20:11.244 --> 0:20:14.484 to have very real long term consequences. 0:20:14.884 --> 0:20:18.684 Yeah, And the line between altruism and revenge, I think 0:20:18.804 --> 0:20:24.244 is actually often kind of thin, right. Yeah, you know 0:20:24.364 --> 0:20:26.364 you say, I am going to seek revenge to defend 0:20:26.604 --> 0:20:30.404 my people in my way of life, right, sacrificing yourself 0:20:30.484 --> 0:20:34.204 and maybe guying a hero or whatever. Right, Like, that's 0:20:34.244 --> 0:20:36.844 I think actually kind of part of the same instinct. 0:20:36.884 --> 0:20:39.884 And people don't like to be put in a place 0:20:39.924 --> 0:20:44.004 where they have fewer options. And this ship builds up 0:20:44.004 --> 0:20:47.164 over time too. You know, maybe one reason why two 0:20:47.244 --> 0:20:49.724 tits for a tat this sounds like X rated. 0:20:52.444 --> 0:20:53.884 I'm not the one who named it. I'm not the 0:20:53.924 --> 0:20:59.844 one who named these strategies. You don't want triple tits. 0:20:59.884 --> 0:21:03.884 I don't know what's going on there, but like, but 0:21:04.044 --> 0:21:08.444 like it's much harder to rebuild trust than to undo. 0:21:09.444 --> 0:21:11.804 Yes, right, Yes, that's a fundamental point. 0:21:12.924 --> 0:21:14.364 You know, if you're in a close relationship and you 0:21:14.444 --> 0:21:19.164 catch a partner cheating on you, then takes a lot 0:21:19.204 --> 0:21:21.444 of convincing that that won't happen again. Right, You might 0:21:21.484 --> 0:21:24.204 overlook the first one for whatever reasons, but like the 0:21:24.284 --> 0:21:27.884 second time, there's a fucking hope to like rebuild trust 0:21:28.244 --> 0:21:35.004