Your life is a constant stream of decisions: what career to follow, how to manage a business, whom to marry, how to bring up children, whether to run for president, how to communicate to a colleague who is being a dick and how to react when life slaps you in the face. The common element is that you are not in a vacuum. Instead, you are surrounded by the world that interacts with any decision you make. The context of the situation you find yourself in matters.
For example, think of the difference between the decisions of a lumberjack and a general. When the lumberjack decides to chop wood, he does not expect it to fight back. The environment he finds himself in is neutral. But when the general tries to cut down the enemy’s army, he must anticipate and overcome his opponent’s plans.

Context Matters

There are sometimes in your life you need to be a lumberjack, a general or something completely different. Therefore no book is the all encompassing bible that has all the answers. A great piece of advice will never likely be universally applied to every situation.
We all would agree that brushing your teeth is great advice. But it isn’t a great idea to whip out the toothbrush at your next business meeting. I think sex is great and healthy. But if my partner and I start going at it in the cafe, then we go to jail.
In Game Theory, the optimal strategy depends on the context and opponent you find yourself with. This applies to all the learnings you’re about to get in the rest of this book.

Common Advice: Be a listener
You have two ears and one mouth the saying goes. You’ll certainly win friends as you’re basically a sounding board for all of their problems and you make them feel important. But this applied to an extreme can be harmful. How can you assert yourself if you’re always listening? Why not learn also to be an influential speaker?

Common Advice: Stay in Your Lane and Specialize
A common meme that penetrates our culture is the advice to ‘stay in your lane’. This is great if you want to become a chess master, ballerina or a pure engineer. But this advice can destroy just as many careers as it can create.

Common Advice; Be Productive
Another great piece of advice is to be productive in your work. Getting more shit done in a smaller period of time surely leads to greater success. As do other skills like negotiation, being able to secure better deals for yourself and your team or pitching ideas for new creative projects. You’ll climb the ladder much faster than all of your equals. But this is meaningless if you’re faster at climbing a ladder that is sitting against the wrong wall. You might be the most successful billionaire…But does it matter if you’re obese, single and depressed?

The context of everything matters. As a human being habiting the world, you need to know what game you’re playing. This is what ‘Game Theory’ is all about.

Playing with Yourself

Millions of people make a new year’s resolution every year. It defines it as “a commitment that an individual makes to a project or a habit, often a lifestyle change that is generally interpreted as advantageous”. What happens to all these wonderful life-improving plans? A CNN survey found that 30% are not kept in February and only 1 in 5 stays on track for 6 months or longer. Many reasons contribute to the failure. People set themselves excessively ambitious goals and are constantly failing.

There are essentially two selves playing within you: the one who wants to drink beer, eat burgers and watch netflix, vs the one that wants chiselled abs and to become a billionaire. The current self wants to take the easy road. So how do you stack the odds in the direction you want? How shall you play this game?

Every night you can resolve to wake up early the next morning for a good start to the day. This is a game of your night-time self against your future weak-willed self. If the game is unstructured, the morning self has the advantage of the second move. However, the night-time self can change the game to create and seize first mover advantage by setting the alarm clock. But will it work? What happens if you just keep smacking zoom repeatedly? Well, an even earlier self could have put the alarm clock on the other side of the room so you’ve got no choice to get up.

But a really sophisticated morning self might stumble towards it and hit it, and go back to bed. Then the night self needs to make something else up. How about an electronic device to brew some coffee to automatically wake you up. So the wonderful smell will induce the morning self out of bed. That will do the trick. It did for me (Jonesy).

This game seems trivial. But the point is that you can make a stream of decisions right now to put yourself on the right track for the future.

Playing with Others

You aren’t in an isolated vacuum. Most games you are playing in involve other players. There are few items that you can keep in mind to win as many games as possible.

Reputation Matters

If you try a strategic move in a game and then back off, you may lose your reputation for credibility. In a once in a lifetime situation, reputation isn’t important and therefore of little commitment value. The Australian Tourists in Bali can typically go to the country and act like wankers because for most of them, the consequences of arrogance won’t last beyond two weeks. In other contexts, reputation is everything. In most of your life you typically play several games with different rivals at the same time, or the same rivals at different times. Future rivals will remember your past actions and may hear of your past actions when dealing with others. Therefore you have an incentive to develop a reputation and this serves to make your future moves credible.

Think of how the members of the revered and feared Sicilian develop and maintain a reputation for toughness. They need to lend credibility to their threats to maintain their power. How should they do this? Dark glasses won’t work, anyone can do that. A Sicilian accent won’t help, in Sicily almost everyone has that. The only thing that really works is a record of committing acts of toughness. Including murder. People need to commit violent acts at the outset of one’s career, to establish reputation.

Teamwork

Think about a General who is in the game of winning the war. The most meaningful game isn’t just with the opposing army, it is with his soldiers. He needs his men to go hammer and thong and the advancing army. If everyone in his team buys into the game, they’ll have a ferocious army that is fearlessly approaching the enemy, excited for battle. The army is much more likely to win and the general and individual soldiers are more likely to survive.
But if I was put on the front line, I know what I’d be doing. I would probably put a game face on as if I’m exerting all the energy that my body can muster, yet slow down a little. I might even ‘accidentally’ trip over a rock in order to fall behind the pack. Whilst I’m there I’d start tying my ‘shoelace equivalent’ of eras ago. In doing such actions, I’m more likely to survive as an individual. But I’m against the general who wants to weed out any signs of such cowardice. How would the general incentivise actions so the collective don’t wimp out?

The ancient roman army, for example, made falling behind the front line a capital offence. As the army advanced, if another soldier saw the other soldier fall behind, he would also be killed. This is the honour code. Anyone who wimps out gets killed on the spot. The risk of falling behind is certain death, the risk of charging forward at full pace is a ‘good chance of death’. Might as well charge forward under this general’s strategy.

Your Opponent’s Strategy

Successful sailboat races have developed an infallible strategy. If they are winning the race by a decent margin and don’t want to lose to second place, they can adopt the ‘follow the leader strategy’. It is simple, someone on the boat looks behind to see the direction that they are pointing the sail. And copy. If you’re winning, the surest strategy is ‘monkey see, monkey do’.

I (Ashto) deployed a similar strategy with footy tipping. It is an Australian tradition to enter a competition where you pick who you think is the winner. At the end of the year, those who have picked the most win a prize. Most people would think the best way to win is to just pick who they think will win in every game. But that is the wrong way to play. Given that you are not in isolation and instead playing with others, Game Theory comes in handy.

This game is much more complex than most realise. In my competition, there are 100 competitors and only 1 winner gets paid. As a player, you don’t want to be in the top 33%. You need to be in the top 1%. So picking the same teams as everyone else is an inferior strategy compared to adopting an element of risk. Without a risky (but not too risky) approach, you won’t emerge from the pack and be victorious.

If half way through the season you find yourself at the top of the leaderboard, the game changes. Rather than emerge from the pack, you want to maintain your lead. All of a sudden like the sailboat races, the follow the leader strategy makes good sense. Picking the favourites give you the highest likelihood of maintaining the lead. Let those who are coming second or third take on the risk, in doing so, your lead is more likely to increase.

Simply picking the winners isn’t the best approach. The best strategy to adopt changes based on your position relative to others and proximity to the end of the game.