TED-Ed: Game theory challenge: Can you predict human behavior? | Lucas Husted

The video explores a guessing game where participants choose a number closest to 2/3 of the average guess. It delves into game theory concepts like common knowledge and Nash equilibrium, explaining how rationality affects decision-making. Real-world results show deviations from perfect rationality. The concept of K-level reasoning is introduced, illustrating its application in high-stakes situations like stock trading and soccer. The video encourages viewers to consider how understanding these concepts might alter their approach to the game.

What is the highest possible average if every player guesses 100 in the 2/3 average game?

• 50

• 66.66

• 33.33

• 75

In the real world, what is the typical range for the average guess in the 2/3 game?

• 50 to 65

• 10 to 20

• 20 to 35

• 35 to 50

What does K-level reasoning help to model in the context of the 2/3 game?

• The exact average of guesses

• The highest possible guess

• The interplay between rationality and practicality

• The lowest possible guess

How do stock traders use K-level reasoning in their decision-making?

• By evaluating others' perceptions of stock values

• By ignoring market trends

• By focusing solely on historical data

• By only considering their own analysis

In penalty kicks, how do players use K-level reasoning to decide their actions?

• By always kicking to the left

• By ignoring the goalie's position

• By predicting the opponent's thoughts

• By memorizing the goalie's past actions