Introduction

Game theory, much like causal estimation, is difficult to learn. The best way to learn is to practice. formative includes a game module that aims to make using game theory in decision-making easier.

Every analysis follows two steps.

1. Describe your options and their outcomes

Declare each possible choice and what payoffs you estimate they will yield under each scenario. Negative payoffs represent losses, positive payoffs represent gains.

from formative.game import maximin

outcomes = {
    "stocks": {"recession": -20, "stagnation":  5, "growth": 30},
    "bonds":  {"recession":   5, "stagnation":  5, "growth":  7},
    "cash":   {"recession":   2, "stagnation":  2, "growth":  2},
}

2. Apply a decision rule

Choose a rule that matches how you want to reason about uncertainty.

result = maximin(outcomes).solve()
print(result)

MaximinResult(
  stocks  worst case: -20
  bonds   worst case: +5  ← chosen
  cash    worst case: +2
)