Notes on Gregory Neil Derry: What Science Is And How It Works (cont.):

Scientific models are simplified (and sometimes overly simplified) representations of reality.

Game Theory: invented 1928 by John von Neumann; simple game as a model: two players, one penny each, penny has either heads up or down; if they match, one player wins, if not, the other wins the game; one cannot devise a strategy to win more than one loses, but one can assure that he does not lose more than half the time (break even); von Neumann showed that in any zero-sum game (=one player's loss is other player's gain) with two players there is always a strategy that minimizes the losses of both players; when rules are given, this strategy can be mathematically calculated.

Prisoner's Dilemma: not a zero-sum game, therefore far more complex: two players are prisoners arrested together for a crime; kept separate (no communication); rules: if neither confesses, both go free; if both confess, both go to jail with light sentence; if one confesses and the other does not, the confessor is paid off, the other gets a heavy jail sentence; therefore: if either of the prisoners try to maximize their personal gain, both together end up worse than they could.

"The novel contribution of game theory has been to make these 'messy' characteristics of human affairs amenable to mathematical treatment."

Other Links:
Prisoner's Dilemma