Game Theory

Yanis Varoufakis is the current Greek finance minister. One of his areas of study when he was an economics professor was game theory. It is widely speculated that he is deploying game theory in his negotiations with European Union leaders. He himself denies this.

But what is this game theory everybody is talking about? Game theory can be described as the mathematical study of decision-making, of conflict and strategy in social situations. It helps explain how we interact in key decision-making processes.

The best known game is the Prisoner’s Dilemma. In the video, Scientific American editor Michael Moyer explains how it works.

First read the assignments. Next watch the video. Take notes to help you do the assignment.



Answer the following questions in English, either in writing or in a group discussion.

1. Describe the terms of the deal the prosecutor in the example offers both prisoners.


2. Describe what the prisoners would most probably do if they could coordinate their decision.


3. Describe the outcomes of the best and worst case scenario.


4. Which outcome (best or worst case scenario) is most probable? Explain your answer?

Extra words assignment
Watch the video once more. This time, focus on the following expressions Michael Moyer uses:

• take the fall
• here’s the catch
• get off scot-free
• mischievous pickle (put someone in a pickle)

1. Explain what these expressions mean.


2. Make one or two new sentences in which you use these expressions.