 |
Strategy in Poker, Business, & War by John McDonald, W. W. Norton, 1950, Paperback reissued 1996Click image to find out more about this book |
Strategy in Poker, Business, & War, by John McDonald, is an excellent NON-MATHEMATICAL introduction to Game Theory -- a subdiscipline of Economics and Mathematics that deals with strategies and decision making. John McDonald does a masterful job of trying to distill from a highly mathematical and complex theory the essential essence necessary to understand the concept.
The book has both good and bad aspects to it. First, the bad news. This book is very old. Since 1950 (its original publication) many significant advances have been made in the theory. For example, McDonald talks a lot about the "Minimax" solution (where one takes the minimum of the maximum payoffs that the player can get). Since 1950, most game theorists talk more about Nash Equilibira. In fact, the minimax in this book is a subset of the Nash solution. The emphasis on the minimax solution -- along with other outdated concepts -- can leave the reader with the wrong impression about the current state of game theory. However, in defense, I should point out that most of these problems were a function of the age of this book and not the inability of the author to correctly understand game theory.
The good news is that the book is extremely well written. This book -- unlike most economics/business books -- has a certain literary quality to it. Another point to note is that the author does a great job of relating game theory to our lives. If one focuses in on the idea of the importance that game theory can have rather than the archane ideas about the theory itself, then this book is -- on net -- is well worth-reading. Finally, as a bonus, the book has some interesting ideas about poker -- these ideas alone may well justify reading this book.
 Image is by Hal R. Varian |
New Ideas From Dead Economists by Todd Buchholz, Penguin (Plume) Books, 1990 (paperback) |
New Ideas From Dead Economists is an overview of economic history, which spans the era from Adam Smith (pictured above) to modern era economics like Monetarism, Public Choice, and Rational Expectations. Although the book does talk a great deal about the contributions of "deceased economists," the book mainly focuses in on how ideas in economics that run the gamut from centuries old to very recent can be useful in our daily lives.
The rather "amusing" title of this book reveals two aspects of Todd Buchholz's effort which are important: 1) the book takes a fairly dry subject -- economics -- and makes it witty and humorous, and 2) we really can learn something from a bunch of dead (and living) economists. I highly recommend this book. I think it is both an excellent introduction to economics for the uninitiated and a nice overview of the history of economics for those who know something about the subject.
At $15.3 Billion, Warren Buffet of Omaha, Nebraska, is the second richest man in the WORLD (as recently as 1994, he was richer than Bill Gates -- i.e., the "Oracle of Omaha" was THE richest man in the world). How did he do it? Wall Street Journal columnist, Roger Lowenstein, gives a brilliant explanation of Buffet's triumphs, failures (which are few), loves, and life. The homespun goodness of Warren Buffet -- which has won him fame and devotion even before this first major biography of the man -- shows through in this book. However, Lowenstein pulls no punches when dealing with the tougher side of Warren. The Oracle of Omaha may be a nice guy, but when it is a choice between the capitalist credo and sheer sentimentalism, Buffet will choose the 'bottom line.'
Although the book is intended as a biography (not authorized, but not discouraged), it also serves as an interesting look at the world of finance. When we see the contrast between simple, gentle Warren Buffet and the "greed is good" mentality of other financiers, we can draw humble inspiration from the Oracle of Omaha.
 |
The Firm, The Market, and The Law and Essays on Economics and Economists by Ronald H. Coase, University of Chicago Press, 1988 and 1994, respectively (both are available as paperbacks)Click image to find out more about Ronald H. Coase |
These two books were written by one of the most brilliant economists of our time, Ronald H. Coase. The winner of the 1991 Nobel Prize in Economics, Coase revolutionized the way economists, lawyers, and others thought about economics and the law. In simple, non-mathematical prose, Ronald Coase laid out the foundations for several field in economics, including: Industrial Organization, Law and Economics, Transaction Cost economics, and many other sub-disciplines of economics, other social sciences, and the law.
In The Firm, The Market, and The Law, some of Coase's most important works are reprinted. In the famous "The Nature of the Firm," Coase made important distinctions between the way a firm is organized and how economic agents (people and firms) are 'organized' in an economy. In the "Problem of Social Cost" and "Notes on the Problem of Social Cost," Coase lays out the fundamentals of the "Coase Theorem" -- a theory in which, under no transaction costs, legal liability and/or social cost imposed by a particular economic agent is irrelevant to the actual result.
In the Essays on Economics and Economists, Ronald Coase gives us his views on the history of economics, the philosophy of economics, and his own interesting experiences as an economist. I would highly recommend both books.
 |
The Calculus of Consent by James M. Buchanan and Gordon Tullock, University of Michigan Press (Ann Arbor Paperbacks), 1965 (paperback)Click image to find out more about James M. Buchanan |
For those of you that have some background in Economics or Political Science, the book and its authors should sound familiar to you. It is considered by many as an important work in the Public Choice/Collective Choice schools of thought in both Economics and Political Science (this school of thought argues that political agents/participants act in a utilitarianly rational way -- therefore, they can act in a way similar to what we believe happens in economic systems). In fact, James Buchanan is probably the most appropriate man to write a book with such acclaim. James Buchanan won the 1986 Nobel Prize in Economics for being one of the founders of the Public Choice school of thought.
Now, the bad news. While there are many good things about the book, the troublesome parts of the book prevents me from recommending it to anyone but the most interested. Why? Although many of the conclusions are valid and logical, the models in the book that illustrates (or tries to prove) these results are too simplistic (even by the standards of other economic models -- which are often accused of being too simplistic). The book attempts to model political systems. However, the political systems in the book probably never has, is not now, and never will be present in any reasonably approximate form in the real world. This point wouldn't be so bad (in terms of the philosophy of science) except for the next point. Usually, economist choose simple models to try to efficiently arrive at a solution or to make sure that all who are interested can understand the results. But, in The Calculus of Consent, the models only serve to confuse -- which doesn't lend itself to efficiency or ease of understanding.
Don't get me wrong. I like Public Choice. I think that many of the conclusions from this book and from the school of thought (in general) are very important. I would recommend this book to those who are interested. Ultimately, however, the main reason that I cannot give this book a higher rating is that it neglects to give space to others in the Public Choice school namely, Kenneth Arrow (who also received his Nobel Prize, in part, because of Public Choice). The only time Arrow is mentioned in the book is in one of the appendices. Even then, Arrow is criticized more than he is praised -- even though the Arrow Impossibility Theorem is probably THE most important idea of the Public Choice school.
Coming soon: books on the economics of human behavior by Gary S. Becker and others.
-- Click arrow to go back to the previous topic: Review of Philosophy and Mathematics.
-- Click arrow to go to next section: Review of History, Biography, and other topics (not covered in other categories).