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Kellogg Distinguished Lecture Series speaker Bruce Bueno de Mesquita

Bruce Bueno de Mesquita

Kellogg Distinguished Lecture Series: Bruce Bueno de Mesquita

The author of <i>The Predictioneers’ Game</i> sheds light on the ways that game theory can forecast political and corporate outcomes

3/9/2010 - Before many people knew what Iran would do about nuclear weapons, Bruce Bueno de Mesquita already had a clue.

Bruce Bueno de Mesquita
In February 2009, the New York University professor and author of The Predictioneers’ Game used a game theory model to predict that Iran would come close to building a bomb, but would not complete the device.

Bueno de Mesquita, the latest speaker in the Kellogg School’s Distinguished Lecture Series, discussed the variables involved in game theory and explained how mathematics can predict human behavior at a Feb. 25 talk at the school.

Bueno de Mesquita’s prediction regarding Iran was on target. Months after that February forecast, a New York Times article on Sept. 9 said American intelligence reports concluded that Iran “has deliberately stopped short of the critical last steps to make a bomb.”

Game theory uses data to evaluate and forecast behavior. Bueno de Mesquita has employed game theory to advise the U.S. government on national security matters and has helped corporations forecast negotiation outcomes. Studies have concluded that about 90 percent of game theory forecasts are accurate, Bueno de Mesquita said.

“If you can predict, you can often engineer the outcome to get a better result,” he said.

Bueno de Mesquita explained the variables that come into play in game theory. They include:

  • the stakeholders in the decision
  • what they want;
  • how focused these stakeholders are on the issue versus other issues, and
  • how much influence the stakeholder can exert.

It is also important to determine how much emphasis players place on agreement.

What may surprise people are the factors that aren’t needed to predict a forecast — namely culture and history. Bueno de Mesquita said that culture may shape the values of the influencers going in, but “everyone is hardwired to enhance their own interest, which may be culturally defined, identity defined.” And history may get the game going but the game cares about the future, not the past, he adds.

“People are rationally self-interested — people behave in what they believe is in their best interest,” Bueno de Mesquita said.

The Kellogg Distinguished Lecture Series features preeminent thought leaders from the worlds of academia, journalism and business. Speakers in the 2009-2010 series have included New York Times reporter Andrew Ross Sorkin; New York Times columnist Gail Collins; and Donald Kohn, vice chairman of the Federal Reserve Board of Governors.

Upcoming speakers include Promod Haque ’83, managing partner at Norwest Venture Partners (March 11); Jean-Claude Trichet, president of the European Central Bank (April 27); and Simon Johnson, an author, columnist and professor of entrepreneurship at the Massachusetts Institute of Technology (May 20).