Peio Zuazo-Garin has been an associate professor at ICEF since 2019, teaching courses to bachelor’s and master’s students. In this interview with ICEF Talks podcast, Professor Peio tells about his passion for game theory and how it relates to the movie Beautiful Mind, why math is an easy field to make careers in, and why it can be useful for a theorist to step out of their comfort zone and into teaching.
About getting into ICEF
My decision to join ICEF was totally unexpected. I had a position in my home university in Spain, so my parents were very happy about having me around and all that. I wasn’t looking for a new job. At that time I had this friend who used to be a faculty member here at ICEF, Emiliano Catonini. He told me that ICEF was hiring and that maybe I had some good chances of getting a job here. So, in principle moving to Russia wasn’t a part of my plan, but I started to think of the Russian people that I’d met while travelling abroad. I remember how brilliant they were, how great their education looked, how they were very interested in science, philosophy and literature – and I started to think, “Well, okay, why not?” I applied, I had my interview, my job talk, everything was online because it was in the middle of the pandemic. This is how I arrived here.
About the choice of math
By the time I had to choose something to study, I still didn’t have a clear idea of what I really wanted to do. As a high school student, I felt attracted by many things, and the one I liked most was language and literature. So, in a way studying math was not a way of not really making a decision.
Math is everywhere. It didn’t seem hard to make a career out of it
It didn’t close the possibility of working in finance, in pure math, it didn’t close the possibility of becoming a scientist. I assumed that math was hard, and my parents were horrified in the beginning, but eventually things turned out well.
About game theory
I’m a part of this generation that, while I was an undergrad – my background is mathematics, not economics – had this movie Beautiful Mind with Russell Crowe as Professor Nash that had that magical aura. Later, when I was looking for a topic to choose for my PhD, I chose game theory. Game theory is an exciting field because it’s really interdisciplinary in the sense that if you are interested in psychology or sociology, or philosophy and epistemology, or, of course, pure math and computer science, game theory will always have some problem to offer you or an interesting thing to think about. Similarly, its area of application is very diverse, from biology to economics to political science. So, that’s what I feel mostly excited about in game theory – the different angles from which you can approach different problems and the many ideas for application that it offers, including law. I myself work on pretty abstract and conceptual stuff.
Game theorists are often asked if they apply game theory in their lives. In Beautiful Mind, Nash tries to use game theory to pick up a girl in a bar, and this scene is meant to show what Nash equilibrium concept is. But actually that’s not what the scene illustrates at all.
I’m not this kind of a researcher who has a very utilitarian view of the things they study. I don’t think that social sciences are something aimed so much at trying to give us guidelines on how to behave in real-life situations
The same as I don’t think a physicist or a mathematician, only because they know geometry, they are going to be automatically good at playing pool. I see game theory as a study of human behavior and human decision, and in this respect our subjects of study – people making decisions – are way ahead of game theorists. Any child, since the beginning, even though – not because they are stupid but because they are very inexperienced in life – they are able to make very complex decisions in situations that involve a lot of uncertainty. And still, they manage to somehow to assess the complexity of the situation and make choices that not totally wrong. So, in this sense I think game theory is aimed more at trying to represent this kind of processes, trying to understand how people to reach this kind of conclusion about what’s right for them to do, instead of trying to say, “Well, that’s how you should behave.”
In this sense, yes, I would love to apply my game theory to become rich, but let’s say that it’s more about trying to associate my perplexity about human behavior. (Note: In information theory, perplexity is a measurement of how well a probability distribution or probability model predicts a sample. It may be used to compare probability models.).
About the paper in The Review of Economics Studies
We were very lucky to have our paper – Rationalizability, Observability and Common Knowledge – published in a top journal. It took us five years to write it, so, that’t something that has accompanied us for long – I mean we were not only writing the ideas and coming up with the right way to express them and so forth. There has been a great pass earlier in game theory and situations of interactive decision-making to come up with a way to explain why people were able to successfully coordinate on the outcome that both of them liked.
Consider the following situation. There are two restaurants. You choose which one to go to. One is very good, the other is not so good. You don’t want to go alone, you want to go with your friend. But you and your friend, you are doing to decide to which restaurant to go without communication. Okay, you are going to choose on restaurant, she is going to choose another, you don’t talk with each other, and of course you want to be together in one restaurant – you don’t want to go alone, that’s very embarrassing. But still, there is one that both of you like a lot and there’s one that none of you like a lot. So, it seems that here it’s obvious what’s going to happen. Both of you like one restaurant, both of you know it, so even though you cannot communicate in principle, you should expect that both of you say, “Okay, let’s go to this restaurant because it’s the one we like.” But, it turns out that this intuition is a little bit misleading.
Just to get a hint on why it is challenging to explain, consider that you and your friend are going to the bad restaurant. Suppose you believe that your friend wants to go to the bad one. If you believe that she is going to the bad restaurant, you should go to the bad restaurant – because you don’t want to be alone. But if she believes you are going to the bad restaurant, she is going to the bad restaurant – because she doesn’t want to be alone. So both of you are going to the bad restaurant. You were able to coordinate. Both of you will actually be right about what the other person is going to do. Both of you will be doing the best thing that you can, conditional on the choice of the other person. But, still. It’s a little bit surprising and hard to believe that this is going to be the outcome, right? Cause both of you like that other restaurant better. Why would you coordinate on the bad one?
Trying to come up with a way that would explain why people, without communication, can’t manage to coordinate on outcomes that all of them prefer the most, is a little bit complicated
The issue, of course, would be easy to solve, if you could communicate right. You’ll say, “Friend, let’s avoid this bad restaurant, let’s go to the good one.” So, this is the idea I and my co-author are trying to implement in this paper. We somehow show that even in situations in which you cannot communicate – if it’s the case – in case you could communicate, you would easily reach an agreement. And efficient outcome can arise without communication.
About teaching and research
One the one hand, when you are teaching, and because the time is limited – students have a lot of things in their mind, from their partner to going out to watching movies – you need to find the ways in which you can convey complex ideas, you have to try to make them easy to understand. And while doing so, you need to be able to distill ideas that are, let’s say, necessary to make a point in a mathematical model that you’re applying in economics. This makes you come up with new insights for a research paper. In a sense, that paper I was talking about came up like that.
Also, sometimes you have to teach topics that are outside of your comfort area. You spend a lot of time preparing for the course, you need to gain real deep understanding of the things that are not per se your specialization. And sometimes by doing so you end up coming up with application of your core research area to these new fields. I think this interaction is very enriching. It’s one of the reasons why I also do teaching, not just research.
About delivering teaching to undergrads and master’s students
I am teaching Mathematics and Game Theory in the master, which are very far from applied – so in the master I have to teach courses that are more aimed at giving tools that students will later employ in other courses and there’s a methodological approach to how we need to teach something – whereas in the undergrad, where I am teaching Industrial Economics, we have mathematical representations of certain economic phenomena – so in this kind of applied courses it’s more about economic insight, whereas in the courses that I’m teaching in the master, it’s more about teaching methodology and making students feel confident about the skills they have developed.
Especially in the first year you need to put great focus on trying to make the students feel enthusiastic. They are in the beginning of a long journey. They come excited, so you have the responsibility to keep this enthusiasm on. And because it’s their first year, they kind of lack certain language or essential tools – issues like understanding that most optimization problems, for example, when a firm is making a decision on how much to produce, are about balance and trade-offs. There’s a positive aspect from increasing production, but I’ll also have to pay more, so how should I find a balance between the positive aspect and the bad one? So, this kind of ideas, we need to emphasize them a lot. You need to try to make them loose fear of using math.
Macroeconomics is more practical. I don’t think my students are going to find real optimization problems in their lives – the tools we are offering them are conceptual tools to try to learn to think about phenomena.
Microeconomics helps students to understand that, when making a decision, they shouldn’t just focus on the good aspects or solely on the bad ones. They should try to find the balance with them both
This sounds very obvious, but this is something that students should not loose from perspective. Tin general, this is the main aspect in which Microeconomics is very emphatic about – about trying to balance trade-offs between what you gain and what you lose. The society is complex, there are many aspects to take into account, there are guidelines that can be useful only in some situations, not in others, and that’s it.
About what junior students need to be aware of
Junior students should try to have patience, because it’s going to be a long journey. They need to invest a lot in trying to get familiar with the tools and ideas that they may in principle not find exciting or easy to apply right away. It’s like going to the gym: you aren’t going to see great results in the beginning, but in the end it comes. Try to believe your professors when they say that you should really try to understand math or a sociological approach or a philosophical issue that you shouldn’t lose from sight – even if you don’t initially believe it, wait.
At ICEF and HSE in general, the resources that the students have are absolutely amazing – library, software, great teachers, student societies, career services, research labs. Here, students are exposed to research from very early on in their studies. I think this gives them the idea that what they are studying is really cutting-edge. ICEF offer the opportunity to obtain top education I have seen in very few places. So, I think, if people get the chance to study here, they should use this opportunity, because by the time they finish and have taken advantage of everything that HSE and ICEF offer, they will be on a great position – and when I say this I mean globally. I always encourage young kids to do things that they like and definitely not do things they don’t like. If it’s clear to them that they are not going to end up interested in Economics – because it’s absolutely not for everybody – then try to do something else.
