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re: Yes China - that is what we are doing

Posted on 4/7/25 at 4:13 pm to
Posted by The Baker
This is fine.
Member since Dec 2011
19007 posts
Posted on 4/7/25 at 4:13 pm to
quote:

Whelp, that solves it. Solutions to a narrow subset of games is applicable to all areas of an industry in which an award was presented I guess.


Wait, is your point that game theory is only applied to literal games?

https://www.sciencedirect.com/science/article/pii/S0022199619300844

quote:


Abstract
We provide an equilibrium analysis of the efficiency properties of simultaneous bilateral tariff negotiations in a three-country model of international trade. We consider the setting in which discriminatory tariffs are allowed, and we utilize the “Nash-in-Nash” solution concept of Horn and Wolinsky (1988). We allow for a general family of political-economic country welfare functions and assess efficiency relative to these welfare functions. We establish a sense in which the resulting tariffs are inefficient and too low, so that excessive liberalization occurs from the perspective of the three countries.

Journal of International Economics


https://www.sciencedirect.com/science/article/pii/S0304406819300849#:~:text=Trade%20in%20competitive%20markets%20results%20in%20the,concept%20used%20is%20pure%20strategy%20Nash%20equilibrium.

quote:

Abstract
We study a general equilibrium model of trade with two goods and many countries where each country sets its distortionary tariff non-cooperatively to maximize the payoff of the representative household. We prove the existence of pure strategy Nash equilibria by showing that there are consistent bounds on tariff rates that are common across countries and that payoff functions in the induced game are quasiconcave. Separately, we show that best responses are strictly increasing functions, and provide robust examples that show that the game need not be supermodular. The fact that a country’s payoff does not respond monotonically to increases in a competitor’s tariff rate, shows that the standard condition in the literature for payoff comparisons across Nash equilibria fails in our model. We then show that the participation of at most two countries in negotiated tariff changes suffices to induce a Pareto improving allocation relative to a Nash equilibrium. Further results provided concern the location of the best response in relation to the free trade point, the monotonicity of payoffs, and the bounds on equilibrium strategies. The final result is that there is no trade if and only if the equilibrium allocation is Pareto optimal.

Journal of Mathematical Economics


There are thousands of peer-reviewed journal manuscripts on the topic. Spend 2 seconds on google scholar.

quote:

Final derail, Nash equilibrium can theoretically apply to multiplayer games, however, you will never get a true equilibrium convergence due to the presence of collusion (such as in the case of international trade).


Not only theoretically, It applies to systems with multiple agents in reality... and of course you wont get absolute convergence in the real world. In complex games like global macro economics with 200 nation states, there are multiple equilibria that all act as attractors. The system is constantly optimizing to a dynamic steady state.

quote:

the presence of collusion
The presence of collusion is often required to find an equilibrium, like the "battle of the sexes" problem depicted in "A Beautiful Mind".

quote:

Its not even clear what point you were trying to make.

My point is that Trump's entire premise is that we are converging on some global minimization of trade-offs for world trade, at the expense of the U.S. who is stuck at some local minimum, despite being a larger, more capable agent than the others. He's flipping the table over and resetting the board.

quote:

By all means though, keep throwing around terms that you have little grasp of and keep digging deeper when questioned about them.
I was fine with having an academic debate, but if you're more interested in being a dick then by all means go ahead. I don't really care if you agree with me or not.
Posted by FoTownBam
Foley Al
Member since Oct 2023
3994 posts
Posted on 4/7/25 at 4:20 pm to
quote:

Nah, we've had more peace in the world since we quit doing this. This is the way to unstable trade and world wars....

Are you stupid or something? There’s literally 2 wars happening right now. Free trade has nothing to do with world peace.
Posted by Seeing Grey
Member since Sep 2015
794 posts
Posted on 4/7/25 at 5:00 pm to
quote:

Wait, is your point that game theory is only applied to literal games?


Lol, not close.

Game Theory != Nash equilibrium

Its that Nash equilibrium realistically only applies to a small subset of "games".

Literally in your quoted text

quote:

The fact that a country’s payoff does not respond monotonically to increases in a competitor’s tariff rate, shows that the standard condition in the literature for payoff comparisons across Nash equilibria fails in our model. We then show that the participation of at most two countries in negotiated tariff changes suffices to induce a Pareto improving allocation relative to a Nash equilibrium.



quote:

My point is that Trump's entire premise is that we are converging on some global minimization of trade-offs for world trade, at the expense of the U.S. who is stuck at some local minimum, despite being a larger, more capable agent than the others. He's flipping the table over and resetting the board.


Cool, no qualms there.
Posted by The Baker
This is fine.
Member since Dec 2011
19007 posts
Posted on 4/7/25 at 5:06 pm to
quote:

Literally in your quoted text


quote:

Its that Nash equilibrium realistically only applies to a small subset of "games".

That's not what they said.

I think the debate you're trying to have is that Nash Equilibriums are simply toy academic problems that don't extend to real world systems in any meaningful way.
This post was edited on 4/7/25 at 5:11 pm
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