Erica Klarreich is one of the few science journalists who explains interesting things I don’t already know clearly enough so I can understand them. I recommend her latest article:

• Erica Klarreich, In game theory, no clear path to equilibrium, *Quanta*, 18 July 2017.

Economists like the concept of ‘Nash equilibrium’, but it’s problematic in some ways. This matters for society at large.

In a Nash equilibrium for a multi-player game, no player can improve their payoff by unilaterally changing their strategy. This doesn’t mean everyone is happy: it’s possible to be trapped in a Nash equilibrium where everyone is miserable, because anyone changing their strategy unilaterally would be even *more* miserable. (Think ‘global warming’.)

The great thing about Nash equilibria is that their meaning is easy to fathom, and they exist. John Nash won a Nobel prize for a paper proving that they exist. His paper was less than one page long. But he proved the existence of Nash equilibria for arbitrary multi-player games using a nonconstructive method: a fixed point theorem that doesn’t actually tell you how to *find* the equilibrium!

Given this, it’s not surprising that Nash equilibria can be hard to find. Last September a paper came out making this precise, in a strong way:

• Yakov Babichenko and Aviad Rubinstein, Communication complexity of approximate Nash equilibria.

The authors show there’s no guaranteed method for players to find even an approximate Nash equilibrium unless they tell each other almost everything about their preferences. This makes finding the Nash equilibrium prohibitively difficult to find when there are lots of players… *in general*. There are particular games where it’s not difficult, and that makes these games important: for example, if you’re trying to run a government well. (A laughable notion these days, but still one can hope.)

Klarreich’s article in *Quanta* gives a nice readable account of this work and also a more practical alternative to the concept of Nash equilibrium. It’s called a ‘correlated equilibrium’, and it was invented by the mathematician Robert Aumann in 1974. You can see an attempt to define it here:

• Wikipedia, Correlated equilibrium.

The precise mathematical definition near the start of this article is a pretty good example of how you shouldn’t explain something: it contains a big fat equation containing symbols not mentioned previously, and so on. By thinking about it for a while, I was able to fight my way through it. Someday I should improve it—and someday I should explain the idea here! But for now, I’ll just quote this passage, which roughly explains the idea in words:

The idea is that each player chooses their action according to their observation of the value of the same public signal. A strategy assigns an action to every possible observation a player can make. If no player would want to deviate from the recommended strategy (assuming the others don’t deviate), the distribution is called a

correlated equilibrium.

According to Erica Klarreich it’s a useful notion. She even makes it sound revolutionary:

This might at first sound like an arcane construct, but in fact we use correlated equilibria all the time—whenever, for example, we let a coin toss decide whether we’ll go out for Chinese or Italian, or allow a traffic light to dictate which of us will go through an intersection first.

In [some] examples, each player knows exactly what advice the “mediator” is giving to the other player, and the mediator’s advice essentially helps the players coordinate which Nash equilibrium they will play. But when the players don’t know exactly what advice the others are getting—only how the different kinds of advice are correlated with each other—Aumann showed that the set of correlated equilibria can contain more than just combinations of Nash equilibria: it can include forms of play that aren’t Nash equilibria at all, but that sometimes result in a more positive societal outcome than any of the Nash equilibria. For example, in some games in which cooperating would yield a higher total payoff for the players than acting selfishly, the mediator can sometimes beguile players into cooperating by withholding just what advice she’s giving the other players. This finding, Myerson said, was “a bolt from the blue.”

(Roger Myerson is an economics professor at the University of Chicago who won a Nobel prize for his work on game theory.)

And even though a mediator can give many different kinds of advice, the set of correlated equilibria of a game, which is represented by a collection of linear equations and inequalities, is more mathematically tractable than the set of Nash equilibria. “This other way of thinking about it, the mathematics is so much more beautiful,” Myerson said.

While Myerson has called Nash’s vision of game theory “one of the outstanding intellectual advances of the 20th century,” he sees correlated equilibrium as perhaps an even more natural concept than Nash equilibrium. He has opined on numerous occasions that “if there is intelligent life on other planets, in a majority of them they would have discovered correlated equilibrium before Nash equilibrium.”

When it comes to repeated rounds of play, many of the most natural ways that players could choose to adapt their strategies converge, in a particular sense, to correlated equilibria. Take, for example, “regret minimization” approaches, in which before each round, players increase the probability of using a given strategy if they regret not having played it more in the past. Regret minimization is a method “which does bear some resemblance to real life — paying attention to what’s worked well in the past, combined with occasionally experimenting a bit,” Roughgarden said.

(Tim Roughgarden is a theoretical computer scientist at Stanford University.)

For many regret-minimizing approaches, researchers have shown that play will rapidly converge to a correlated equilibrium in the following surprising sense: after maybe 100 rounds have been played, the game history will look essentially the same as if a mediator had been advising the players all along. It’s as if “the [correlating] device was somehow implicitly found, through the interaction,” said Constantinos Daskalakis, a theoretical computer scientist at the Massachusetts Institute of Technology.

As play continues, the players won’t necessarily stay at the same correlated equilibrium — after 1,000 rounds, for instance, they may have drifted to a new equilibrium, so that now their 1,000-game history looks as if it had been guided by a different mediator than before. The process is reminiscent of what happens in real life, Roughgarden said, as societal norms about which equilibrium should be played gradually evolve.

In the kinds of complex games for which Nash equilibrium is hard to reach, correlated equilibrium is “the natural leading contender” for a replacement solution concept, Nisan said.

As Klarreich hints, you can find correlated equilibria using a technique called linear programming. That was proved here, I think:

• Christos H. Papadimitriou and Tim Roughgarden, Computing correlated equilibria in multi-player games, *J. ACM* **55** (2008), 14:1-14:29.

Do you know something about correlated equilibria that I should know? If so, please tell me!