This Greek game-theory guru is the most interesting man in Europe right now
The Greek stock market exploded Tuesday with the Athens Stock Exchange General Index surging 11.3%.This comes amid rapidly evolving talks over how Greece will climb out of its debt crisis.
At the center of these dealings is Greek finance minister, Yanis Varoufakis. He's the voice and face of the Greece's economic situation today.His position on what to do about Greek's crushing debt seems to change daily, but that seems to be working to his advantage.
Varoufakis, who describes himself as a libertarian Marxist, became the finance minister after the far-left Syriza party won a resounding victory in Greek elections in January.
Before being elected to parliament, Varoufakis was an economics professor. He teaches economic theory at the University of Athens, but for the past two years he has spent time as a visiting professor at the University of Texas at Austin.
But he was probably best-known in Europe for his work at Valve, the video-game company, as the man who analyzed sales of virtual goods and micro-transactions in games like Dota 2 and Counter-Strike. Varoufakis joined Valve three years ago to oversee its Steam Market virtual economy.
He looks like a tech exec too. In photos of his negotiations with various European leaders over the weekend, he appeared with an untucked shirt and no tie. It seemed to convey a message: I don't play by your rules.
Varoufakis' academic specialty is game theory, the study of strategic decision-making. James Galbraith, a fellow UT Austin professor, told Bloomberg that Varoufakis was as knowledgeable "as anyone on the planet" and would "be thinking more than a few steps ahead" in negotiations with Greece's creditors, known as the troika (the International Monetary Fund, the European Central Bank, and the European Commission).
Read more: http://uk.businessinsider.com/yanis-varoufakis-most-interesting-2015-2?r=US#ixzz3Qlacg5fl
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BOTH of these posts would get one from me. 
absolutely no sympathy.. but I am curious as to why they were investing in "Greece" .. given their economic situation vis a vis the global financial crises etc. yes, the report indicates they were betting on recovery, however it's been a tad been dicey or so i thought. 
Jason Welker
What makes oligopolistic markets, which are characterized by a few large firms, so different from the other market structures we study in Microeconomics? Unlike in more competitive markets in which firms are of much smaller size and one firm’s behavior has little or no effect on its competitors, an oligopolist that decides to lower its prices, change its output, expand into a new market, offer new services, or adverstise, will have powerful and consequential effects on the profitability of its competitors. For this reason, firms in oligopolistic markets are always considering the behavior of their competitors when making their own economic decisions.
To understand the behavior of non-collusive oligopolists (non-collusive meaning a few firms that do NOT cooperate on output and price), economists have employed a mathematical tool called Game Theory. The assumption is that large firms in competition will behave similarly to individual players in a game such as poker. Firms, which are the “players” will make “moves” (referring to economic decisions such as whether or not to advertise, whether to offer discounts or certain services, make particular changes to their products, charge a high or low price, or any other of a number of economic actions) based on the predicted behavior of their competitors.
If a large firm competing with other large firms understands the various “payoffs” (referring to the profits or losses that will result from a particular economic decision made by itself and its competitors) then it will be better able to make a rational, profit-maximizing (or loss minimizing) decision based on the likely actions of its competitors. The outcome of such a situation, or game, can be predicted using payoff matrixes. Below is an illustration of a game between two coffee shops competing in a small town.
In the game above, both SF Coffee and Starbuck have what is called a dominant strategy. Regardless of what its competitor does, both companies would maximize their outcome by advertising. If SF coffee were to not advertise, Starbucks will earn more profits ($20 vs $10) by advertising. If SF coffee were to advertise, Starbucks will earn more profits ($12 vs $10) by advertising. The payoffs are the same given both options for SF Coffee. Since both firms will do best by advertising given the behavior of its competitor, both firms will advertise. Clearly, the total profits earned are less when both firms advertise than if they both did NOT advertise, but such an outcome is unstable because the incentive for both firms would be to advertise. We say that advertise/advertise is a “Nash Equilibrium” since neither firm has an incentive to vary its strategy at this point, since less profits will be earned by the firm that stops advertising.
As illustrated above, the tools of Game Theory, including the “payoff matrix”, can prove helpful to firms deciding how to respond to particular actions by their competitors in oligopolistic markets. Of course, in the real world there are often more than two firms in competition in a particular market, and the decisions that they must make include more than simply to advertise or not. Much more complicated, multi-player games with several possible “moves” have also been developed and used to help make tough economic decisions a little easier in the world of competition.
Game theory as a mathematical tool can be applied in realms beyond oligopoly behavior in Economics. In each of the videos below, game theory can be applied to predict the behavior of different “players”. None of the videos portray a Microeconomic scenario like the one above, but in each case a payoff matrix can be created and behavior can be predicted based on an analysis of the incentives given the player’s possible behaviors.
more
http://welkerswikinomics.com/blog/2012/03/23/understanding-oligopoly-behavior-a-game-theory-overview/
