Game theory is the cheat code to life

 

Game theory can explain humanity's biggest problem

Isaac Newton's third law tells us that for every action, there is an equal and opposite reaction. In life, much like in physics, our choices often provoke responses from others (sometimes equal, sometimes opposite). Every interaction is a push-and-pull of decisions and outcomes.

If life is a game, as many philosophers and scientists suggest, then understanding the "laws" of this game can give us an edge. If we look at real-life situations like two countries sitting across a negotiation table, two people on a first date deciding whether to open up, or coworkers silently choosing who will take on a tough project, it's all strategy, and this is where game theory comes in. Game theory is the mathematical study of strategic decision-making, and it might just be the ultimate cheat code to life and its challenges. By predicting how others react to our actions (and vice versa), game theory helps us make smarter choices in relationships, business, and everyday dilemmas.

But there's more to this than just a way of life… In 1983, a Soviet officer named Stanislav Petrov received a warning that U.S. nuclear missiles were on their way. Protocol demanded he report it, which would almost certainly trigger a full-scale retaliation and global war. Instead, he trusted his judgment that the system had glitched. He stayed quiet. He was right. The missiles never existed, and the warnings were due to a fault in the system. One man's decision not to "play by the script" of fear quite literally saved the world.

If the wrong call could have ended civilization, what does that say about the smaller choices we face every day? The ones that shape our careers, our relationships, and our future?

The prisoner's dilemma

  

  Every day we face choices that echo a classic game theory scenario: the Prisoner's Dilemma. Imagine two accomplices arrested for a crime. Separately, each is offered a deal: betray the other (defect) and go free while the partner serves a long sentence, or stay silent (cooperate) and hope the other does too. If both stay silent, they get light sentences. If both betray, they both serve moderately long terms. The catch? Neither prisoner knows what the other will do. The rational move from a selfish standpoint is to defect; betrayal guarantees you won't get the worst outcome, no matter what the other does. Nobel-winning mathematician John Nash showed that "rational" players will often end up in a Nash equilibrium where each is doing their best given the other's choice, in this case, mutual betrayal. Unfortunately, that equilibrium isn't great for anyone: both prisoners betraying leads to a worse outcome (both punished) than if they had trusted each other.

the prison dilemma

  This dilemma plays out in real life more often than we realize. A famous example was the U.K. game show Golden Balls, essentially Prisoner's Dilemma with cash on the line. In the final round, two contestants had to choose to Split the jackpot or Steal it. If both chose Split, they'd share the money. If one chose Steal while the other split, the stealer gets it all and the splitter gets nothing. If both chose Steal, neither gets a penny.

split or steal? cooperative behavior when the stakes are large

Pure game theory says you should always choose "Steal" as it's mathematically the safest bet, since it either wins you everything or, at worst, gets you nothing (the same as if you both split and got nothing). And yet, human players often defy cold logic. Over 53% of real contestants on the show chose to cooperate ("Split") despite the temptation to stab the other in the back which is an "irrational" choice in the narrow game-theory sense.

Why would anyone forgo a chance to grab the entire jackpot? Because real life isn't played on paper. Emotions like trust, fear, and fairness complicate the equation. Many people simply feel it's better to be fair or they hope the other person feels the same, so both can win modestly rather than risk losing everything.

The most legendary Golden Balls moment turned the game on its head. (video below if you want to skip reading this part) Contestant Nick Corrigan adopted a radical strategy: he looked his opponent Ibrahim in the eye and declared, "I'm going to pick Steal." He assured Ibrahim that if Ibrahim chose Split (trusting him), Nick would later share the winnings outside the game. Then Nick refused to budge from his claim and for the entire negotiation, he calmly repeated that he would steal no matter what. This put Ibrahim in a bind: if he mistrusted Nick and also picked Steal, both would get nothing; the only sliver of hope was to trust Nick's promise and pick Split. In the end Ibrahim, agonizingly, chose to cooperate (Split) and trust Nick. The final reveal came; Nick opened his ball… it said Split. He hadn't betrayed him after all. Both men walked away happily with half the jackpot.

Nick's counterintuitive ploy "broke" the game by using game theory and psychology to force the opponent's hand. Essentially, he eliminated Ibrahim's incentive to defect by making clear that he would (seemingly) defect no matter what which oddly encouraged cooperation. Such is the power of game theory thinking: by analyzing the incentives, Nick crafted a win-win outcome from a lose-lose situation.

The lesson? When you understand the game you're in, you can sometimes rewrite the rules. In life we constantly face our own Prisoner's Dilemmas from negotiating a salary to deciding whether to speak up in a group project. Do you act selfishly or do you trust and cooperate? Game theory teaches us to analyze the payoffs and pitfalls of each choice. Sometimes the "steal" move (looking out solely for yourself) is tempting, but it can backfire if everyone else plays that way too. As we'll see, the real cheat code is knowing when to cooperate and when to look out for number one and how to encourage others to cooperate with you

Why humans don't play "Perfect"

  Classical game theory assumes players are perfectly rational and self-interested. In reality, people are not cold calculators and thank goodness for that. Human beings have emotions, moral values, and sometimes flawed logic that lead them to break the "rules" of purely rational play. From a strict game-theoretic perspective, those Golden Balls contestants who chose to Split (cooperate) were acting irrationally (over 50% did so). Yet, many of them likely valued honesty, or feared the guilt of stealing, or believed the other person might split too. Pride, trust, fear, vengeance these messy human factors often trump mathematical optimality. Game theorists note that concepts like the Nash equilibrium (where each player's choice is optimal given the other's choice) can end up at odds with what people feel is right. In the classic Prisoner's Dilemma, the Nash equilibrium is mutual defection (both betray) which is a pessimal outcome for both. Humans, however, often attempt to avoid that outcome by communicating, forming agreements, or trusting reputations, even if it risks "being the sucker."

Modern AI systems, from self-driving cars negotiating intersections to multi-agent reinforcement learning in simulations, often lean on game-theoretic principles like the Nash equilibrium. Two AIs trained to "win" can easily get locked into mutual defection loops, unless their design encodes cooperation, forgiveness, or communication channels.

Machine learning (ML) and game theory, are basically the concept of Nash Equilibrium. Machine Learning is known for its ability to find patterns and make predictions from data, while Nash equilibrium is a fundamental concept in game theory used to analyze strategic interactions.

Real life also allows something game theory's basic models often forbid: communication. We can signal intentions, plead, bluff, or establish credibility. In Golden Balls, players could negotiate beforehand, which fundamentally changes the game. Nick's ingenious strategy was a form of communication a pre-game commitment (albeit a fake one) to a course of action that altered his opponent's behavior. In life, we constantly send signals to each other to influence outcomes. Honesty can be a signal ("I won't cheat you, please don't cheat me"), just as threats can be ("Cross me and I'll retaliate").

Game theory isn't only about numbers; it's entwined with psychology.

Let's consider an extreme thought experiment often cited in game theory discussions: the Kidnapping Dilemma. Suppose you (hypothetically!) kidnap a celebrity and demand ransom. Once the ransom is paid, you face a choice: release the hostage as promised, or eliminate them to avoid being identified. Morally the choice is clear, but game-theoretically, the "rational" move might be grim. If you let them go, you risk them helping the police catch you. If you… remove them, you eliminate that risk. A ruthless game-theory "purist" might calculate that killing the hostage is the dominant strategy for self-preservation. The mathematical logic could be sound but it completely ignores ethics and humanity. No sane person wants to live in a world where everyone behaves like a psychopath maximizing a payoff matrix. This morbid scenario simply highlights that pure rational self-interest can lead to outcomes we consider awful. In real life, our values and empathy rightly override the cold calculations.

Short term game theory = psychology of psychopaths long term game theory = mutual relationships and forgiveness.

In the short term it is often the environment that shapes the player… but in the long run it is the players that shape the environment.

What would you choose?

 

Game theory models also assume players clearly understand the game and payoffs but often we do not. We rely on conventions and norms as mental shortcuts. For example, if I flip a coin and ask you to call heads or tails, you might instinctively blurt "Heads!" simply because we tend to list heads before tails. In fact, humans have a slight bias toward choosing "heads" in such situations. A clever opponent, knowing this convention, could guess our call more often than pure chance would allow. This seems trivial (who cares about coin flips?), but conventions run much deeper in life. Why do we drive on a certain side of the road? Because society agreed on a convention; a cooperative equilibrium to avoid deadly collisions. If you drive in England, you stick to the left; in the US, the right. Breaking that norm is catastrophic.

As game theorist Thomas Schelling noted, coordination games often hinge on focal points or common expectations. The rules of the road, tipping customs, handshakes, and even money itself are all conventions. They exist because everyone expects everyone else to follow them. Money, for instance, has value only because we collectively believe it does; it's just a "green paper" backed by mutual trust. Game theory teaches us that when everyone defects from a convention (nobody pays taxes, or no one trusts the currency), the system collapses. Fortunately, humans are pretty good at developing norms that steer us toward mutually beneficial behavior without any central authority, a spontaneous order of play, if you will.

Another way reality diverges from simple game theory: uncertainty and randomness. If you always use the same play when playing football, or you only bluff in poker when you have a bad hand, opponents will catch on and exploit you. The best poker players mix up their strategy occasionally bluffing with a weak hand, occasionally playing straightforward to keep others off-balance. As the saying goes, if your play is predictable, it's exploitable.

3 game theory tactics, explained. How to maximize wins and minimize losses, explained by four experts on game theory.

Game theory even provides mathematical guidance (the theory of mixed strategies) on what fraction of the time you should randomize each action to be optimally unpredictable. The legendary military strategist Sun Tzu intuited this long before modern math: "Be extremely mysterious, even to the point of soundlessness," he advised, because if your enemy can't anticipate you, they can't counter you.

In everyday life, this might mean avoiding patterns that others can exploit, whether negotiating (never always cave or always hold firm) or parenting (inconsistently rewarding certain behaviors so kids don't game the system). Of course, randomness isn't a cure-all; if you flip between being kind and cruel at random, you'll just confuse and alienate people. The key is calibrated unpredictability in competitive situations, balanced by reliability in cooperative ones. In short,

don't be too readable when you have adversaries, but be transparent when you need allies.

 

How to win?

Life is not a one-round game. Most of our relationships with colleagues, friends, family, neighbors are repeated interactions. What might be a winning move in a single encounter (e.g. tricking someone for quick gain) could be a losing strategy over time as reputation and reciprocity kick in. In game theory terms, many of life's games are iterated. This is where cooperation can finally triumph over pure self-interest.

The 1980s brought a breakthrough experiment in understanding long-term strategy. Political scientist Robert Axelrod organized a famous tournament, inviting people to submit computer programs to play an iterated Prisoner's Dilemma (200 rounds against each opponent). The question: which strategy yields the best overall outcome in the long run? To everyone's surprise, the simplest program won. It was named Tit for Tat. Tit for Tat's rules: Start by cooperating on the first move, then every move thereafter, do whatever the other player did on the previous move. In other words, begin friendly, and then mirror your opponent: if they were cooperative, you cooperate next; if they betrayed you, you retaliate with a betrayal next. This little algorithm defeated far more complex "clever" strategies in Axelrod's tournament, not just once, but in repeated tournaments.

Axelrod's advertisement recruiting players for his second tournament, in Personal Computing magazine.

Why did Tit for Tat prevail?

As Cornell professor Steven Strogatz summed it up, the winning approach distilled to four principles: be nice, be provokable, be forgiving, and be clear.

• Be Nice (Start Cooperative): Tit for Tat never strikes first. It begins every new interaction with trust and goodwill. In Axelrod's simulation, all the top-performing strategies shared this trait of niceness, they weren't the first to defect. In life, this means give others the benefit of the doubt initially. Start from a place of kindness and openness. As a strategy, niceness invites cooperation; it signals "I'm willing to work with you." Think of meeting someone new: if you're warm and trusting, they're more likely to respond in kind. In Axelrod's results, every strategy that finished at the top was "nice," and even the worst nice strategy outscored the best nasty (first-strike) strategy. The old adage "nice guys finish last" doesn't hold water here — nice guys (and gals), in a repeated game, actually finish first.
• Be Provokable (Stand Up for Yourself): "Provokable" might sound odd, but it means willing to retaliate when necessary. Tit for Tat will answer betrayal with betrayal but only tit-for-tat, one for one. It doesn't allow itself to be a doormat. This quality prevented exploitation: if the opponent tried to take advantage, Tit for Tat immediately punished them next round. In life, being provokable translates to setting clear boundaries and not rewarding bad behavior. If a friend lies to you or a coworker slacks off and dumps work on you, a provokable strategy means you address it, you don't just smile and let it continue. Importantly, Tit for Tat's retaliation is measured: one betrayal in response to one betrayal, no more. You don't escalate into oblivion; you simply show the other party that bad actions have consequences. This mirrors the concept of "an eye for an eye".
• Be Forgiving (Don't Hold Grudges): Crucially, Tit for Tat doesn't stay angry. It retaliates once and then, if the opponent returns to cooperating, Tit for Tat immediately forgives and cooperates again too. It doesn't keep punishing past wrongs beyond that initial proportional response. This willingness to forgive keeps relationships from degenerating into endless feuds. The lesson for us is to forgive sincere remorse and move on. If someone wrongs you and then makes amends, continuing to punish them only ensures both of you lose out (just as two grudging Tit-for-Tat players would keep trading blows and never rebuild trust). This recognizes that we all make mistakes and that resuming cooperation can make everyone better off than perpetual revenge. In life terms: let minor transgressions go once addressed. Don't let one bad incident poison a potentially good long-term relationship.
• Be Clear (Transparent Strategy): Tit for Tat is simple and easy to understand. The other player can quickly figure out that Tit for Tat will always reciprocate whatever they do. There's no complex trickery or random behavior (aside from matching the opponent). This clarity itself promotes cooperation, it's obvious that double-crossing Tit for Tat will only hurt you, so the opponent's best move is to cooperate. In human interactions, being clear means making your expectations and responses known. People shouldn't have to guess at your intentions or worry that you're secretly plotting against them. When you are consistent and honest about how you'll react, you become trustworthy and you deter people from trying to take advantage of you.

These four principles: start nice, retaliate when needed, forgive quickly, be transparent turned out to be an optimal strategy in repeated games. It's beautiful how this mirrors basic moral intuitions shared across cultures. Not the pacifist "turn the other cheek" of the New Testament, but the older justice principle: do good to me and I'll do good to you; harm me and I'll return the blow but no more than a just measure, and I'm ready to make peace if you are. Game theory, in a way, rediscovered a recipe for stable cooperation that societies have known for millennia.

The cheat codes: Winning strategies for the game of life

1. Think long-term (Play the Infinite Game).
2. Identify the game you're in.
3. Start nice, but stand your ground (Tit for Tat in life).
4. Forgive and move on.
5. Avoid the sunk cost trap (know when to quit or adapt).
6. Focus on your own quest (and fewer side quests).
7. Build Alliances (Life is multiplayer, not solo).

Leveling up in the real world

Physics has immutable laws, like Newton's, that govern the material world. In the social world, game theory provides some of the closest things we have to laws of human interaction. They're not absolute; people aren't billiard balls but they are powerful patterns. The ultimate cheat code to life is understanding these patterns and applying them with wisdom and heart. Game theory at its core reveals a compelling truth:

while selfishness can win one round, cooperation wins the final round.

The math shows that kindness, bounded by healthy self-interest, is often the most "rational" strategy in the long haul. Perhaps that's why humanity has developed morals and social norms that urge us to be fair, to forgive, and to work together and those who didn't, didn't survive the iterative game of history.

By viewing your choices through a game theory lens, you become more mindful of the consequences. You start asking, "If I do this, how will others react? What chain of events am I setting in motion?" This is like seeing the code of the Matrix, it turns confusing social situations into solvable puzzles. But remember, unlike a computer game, you're playing with living, feeling humans. Use these cheat codes not to manipulate others against their interests, but to find win-win outcomes and steer away from unnecessary conflict. As the Global Leaders Institute aptly put it, the goal isn't always to "win" in the sense of beating someone else, but to make better decisions that lead to better outcomes for everyone involved. In life's most important games like love, friendship, community the best outcome is one where all players are better off and the game keeps going joyfully.

In the end, life isn't about never losing a round. Game theory reminds us that the real strategy is staying in the game. As in boxing you don't lose when you fall down, you lose when you don't get back up.

So next time you're caught in a rivalry at work, or locked in an argument with a partner, or even just pondering whether to merge into that busy traffic lane, remember the cheat codes. Take a deep breath and channel your inner game theorist. Be the reliable yet savvy player who chooses cooperation first, stands firm against defection, forgives mistakes, and seeks the path where everyone can win. Recognize the game, play it wisely, but never lose your humanity in the process. As game theory teaches and life confirms, the real jackpot is not won by defeating others, but by aligning with them turning potential adversaries into partners. Master that, and you've truly cracked the code. Good luck out there, and see you in the next round!