The 6th Session of “The Economic Way of Thinking” Lecture Series: Dynamic Game and Reverse Reasoning

On the afternoon of April 14th, 2021, the sixth session of “The Economic Way of Thinking” Lecture Series was held in Auditorium 205 of the Central Main Building, with the theme of “Dynamic Game and Reverse Reasoning”. The event was delivered by Prof. Wang Yong, Tenured Associate Professor of the School of Social Sciences, Tsinghua University to doctorate candidates of Institute for International and Area Studies, Tsinghua University (IIAS-THU).

This lecture consisted of three parts. Prof. Wang started the lecture with two types of games, i.e., static game and dynamic game. In particular, he pointed out that when the interests of the two parties are in conflict, if the cash flow of one party brings adverse consequences to the interests of the other party, the latter will try to influence the former with his words, hoping that the former would make a choice favorable to him. Therefore, in this view, in a dynamic game, the late-mover may use words to influence the choice of the first-mover. Furthermore, Prof. Wang raised the issue of dynamic consistency and quoted the classical theory of Prof. Reinhard Selten, Nobel Laureate in Economics and German mathematician, believing that as the first-mover of the game has the first-mover advantage, the other party of the game will hope to change the other party’s choice through promises and threats. Therefore, it is necessary to identify and judge such moves and implications.

In the second part, Prof. Wang explored the relationship between spiritual leaders and religious authority. He pointed out that in many areas where industrial civilization or technological civilization is underdeveloped, it often maintains cooperation among members of society through religious rights. In the past, human society had two authorities. One was secular authority, namely kings and emperors. The other was religious authority, i.e., popes and priests. Especially in Europe, throughout its history, it has been dominated by a game between secular authority and religious authority for centuries. Furthermore, Prof. Wang highlighted that our interests are classified into immediate interests and personal interests. If we value the future interests and think that the future interests are more important than the current interests, we may be willing to maintain the relationship of repeated management, which is the influence of interest relations on our decision-making.

At the end of the lecture, Prof. Wang explained the meaning and application of property right mechanics. That is, in order to make better use of public resources, it is essential to minimize public property rights and increase intelligent products accordingly.

In this lecture, Prof. Wang interpreted the economic phenomena in life to the students present in a vivid and humorous manner by referring a large number of interesting and practical cases, inspiring the participants to drill down.

Prof. Wang Yong is Tenured Associate Professor of the Institute of Economics at the School of Social Sciences, Tsinghua University and Member of the Academic Committee of IIAS-THU. Prof. Wang holds a PhD from Guanghua School of Management of Peking University and served as a postdoctoral fellow at Department of Economics of Harvard University. He was appointed as Deputy Director of the Institute of Economics at Tsinghua University in 2012 and further served as Executive Vice President of the Institute of Minsheng Economic Research at Tsinghua University. His research interest covers game theory and its applications, theories of Internet economy and enterprises and park economy.

Text by: Wang Zijing
Typeset & Edited by: Wang Zijing
Reviewed by: Yang Chongsheng