What Basic Game Theory Teaches Us About Startups | Y Combinator
Reference: Y Combinator. (2022, September 01). What Basic Game Theory Teaches Us About Startups [Video]. YouTube.
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Learn from business pioneers and discover how to succeed with startups by watching "What Basic Game Theory Teaches Us About Startups"
In this video, Y Combinator's Michael Seibel and Dalton Caldwell discuss the basics of game theory and how it applies to startups. They define a zero-sum game as one in which the gain of one player comes directly from the other, such as gambling or "confidence games" in which one manipulates people to do what they want. They explore how zero-sum games have been used throughout history, from prehistoric times to the early 1900s banks selling bad debt to unsuspecting buyers. The video emphasizes the importance of positive-sum games that create lasting value and how when zero-sum games are taken too far, society begins to degrade. Seibel and Caldwell provide an insightful look into the implications of game theory for startups and beyond.
1. Definition of a zero-sum game: A game where the upside that a player gains comes directly from the other player, with no new money created in the system.
Game theory has been used to explain a variety of complex situations, and it can also be applied to the world of startups. In this video, Michael Seibel and Dalton Caldwell discuss how zero-sum games can be dangerous for entrepreneurs and how they can be avoided.
A zero-sum game is a situation where one person's gain is another person's loss. An example of this is gambling, where a winner will take the money from the loser. Dalton explains that this kind of game can be very tempting for people because it can give them disproportionate wins without the perception of doing a disproportionate amount of work. But it can also be very dangerous, as it can result in people taking advantage of others for their own gain.
Michael and Dalton then discuss other examples of zero-sum games, such as social media, nicotine, and sugar. They also mention how some of these games can be legal, such as confidence games, where the goal is to manipulate people and get them to do what you want.
The video then goes on to discuss how zero-sum games can be a problem in the world of finance, as banks have been known to sell bad debt to unsuspecting customers. This highlights the importance of understanding the dangers of these kinds of games and how they can negatively impact society.
In conclusion, this video provides an insightful look into the dangers of zero-sum games. It is important to be aware of these games and to understand the implications they can have on people and the economy. By avoiding these games, entrepreneurs can focus on positive-sum activities that can create value for both parties involved.
Game theory is like a game and it teaches us how to play it. A zero-sum game is like a one-on-one competition, such as a bet or a game of poker, where one person's gain is another person's loss. It's like a zero-sum game of tug-of-war where the rope can only get shorter, not longer - no new money is created. On the other hand, a positive sum game is like building a house together - everyone's effort adds up to create something new and valuable that can last and generate income. Gambling is the classic example of a zero-sum game, but there are other games where people try to fool each other, which is like gambling in disguise. These zero-sum games can lead to bad outcomes, like when banks sold bad debt to unsuspecting people in the early 1900s. The lesson of game theory is that positive sum games are better in the long run - creating something new with everyone's effort is more beneficial than taking away from someone else.
"Gambling is like the textbook zero-sum game - if we play poker the money that you win came out of someone else's pocket" - Dalton Caldwell
"The world of startups is a game of competition and cooperation." - Speaker in the video.
"The most important thing is to stay ahead of the curve and be the first to spot an opportunity." - Speaker in the video.
"You can't just do what everyone else is doing, you have to be different." - Speaker in the video.
1. Decision Making
1. Analyze the differences between zero-sum games and positive-sum games.
2. Evaluate the social and economic implications of zero-sum games.
3. Synthesize solutions to address the potential harms caused by zero-sum games.
4. Explain the concept of FOMO economy and its impact on the market.
5. Evaluate the ethical implications of zero-sum games in the finance world.
6. Create strategies to prevent negative consequences from occurring due to zero-sum games.
1. I have learned that zero-sum games are situations where one person's gain comes at another person's expense. An example of this is gambling, where one person's winnings are taken from another person's pocket.
2. I have also learned that there are positive-sum games, where value is created that lasts. An example of this is when two people work together to build a house, which can then be rented out to generate income.
3. Lastly, I have learned that people can sometimes use zero-sum games to take advantage of others by manipulating them for their own gain. This can be seen in situations like poker, confidence games, and even in some financial transactions.
Dalton Caldwell and Michael Seibel
Dalton Caldwell and Michael Seibel are co-founders of Y Combinator, which is a venture capital firm that invests in seed-stage startups. Dalton Caldwell is a serial entrepreneur and has founded multiple companies, including App.net, an application platform and an analytics platform, as well as PicPlz, a mobile photo-sharing service. Michael Seibel is Y Combinator's CEO, and has previously been a partner at Y Combinator and founder of two startups, Justin.tv and Socialcam. They are experts on What Basic Game Theory Teaches Us About Startups as they have experience in venture capital, as well as experience in founding and running startups. Dalton Caldwell and Michael Seibel
These competencies are important for the course on Cognition because they are essential skills for problem-solving and effective decision making. Decision making is an essential life skill that everyone should possess. It involves the ability to analyze a situation and determine the best course of action in order to achieve a desired outcome. Startup and entrepreneurship is important to learn because it provides an understanding of how to create and grow a business. Strategic thinking is a skill that helps to make more informed decisions by allowing someone to plan ahead, analyze situations, and evaluate potential outcomes.
To help build these competencies, students can use a variety of frameworks and pedagogies. For decision making, students can use the Eight-Step Decision Making Model which includes identifying the problem, gathering information, defining criteria, developing alternative solutions, evaluating alternatives, selecting the best alternative, implementing the solution, and evaluating the solution. For startup and entrepreneurship, students can use the Lean Startup Model which focuses on quickly testing ideas and gathering customer feedback in order to ensure successful product launches. For strategic thinking, students can use the SWOT Analysis which involves analyzing the strengths, weaknesses, opportunities, and threats of a given situation. Additionally, students can also use the PESTLE Analysis which looks at the political, economic, social, technological, legal, and environmental factors that can impact a decision.
Q: According to the video, what is an example of a zero-sum game?
A. Building a house
Answer: B. Playing poker
1. What is a zero-sum game?
5. How can startups utilize basic game theory to make more informed decisions?
Zero Sum Games, Positive Sum Games, Gambling, Financial Regulations, FOMO Economy, Social Media, Confidence Games, Manipulate People, Dead Buffalo, Zero Sum Definition
1. Zero-sum games involve two players competing for limited resources, with one player's gain coming at the expense of the other.
1. Create a board game that teaches players the fundamentals of game theory and positive/zero-sum games.
This learning instructional guidance was formulated using the GPT-3 language model created by OpenAI.
FOMO economy is real- stocks only going up can seem easy, but remember the basics of game theory: Zero-Sum Games create a winner & a loser. Look to create positive-sum games - where everyone can win. #GameTheory #ZeroSum #PositiveSum #WinWin #FOMO @Accredicity