Ancient Chinese Practice Application of the Game Theory

I took my first Game Theory class last Wednesday morning. From my understanding, Game theory is about making strategic decisions so as to maximize profit. A famous story from The Romance of the Three Kingdoms explains it well. [Game Theory does not take into consideration the nature of Man.  It uses best logical lookahead to determine the possible outcome.  Thus games like tic-tac-toe, Nim etc are best examples in which the theory can be applied.  It is like the physics problem of determining the best trajectory if one precludes air resistance and the rotation of the earth]

Around 200 A.D., the three major political groups were respectively led by the Liu State of Shu, the Cao State of Wei and the Sun State of Wu. The Cao State was considered to be the most powerful. In 208 A.D., the combined forces Liu and Sun attacked Cao at Chibi, the waterside of the Changjiang River. A sudden shift in wind direction, as predicted by Zhuge Liang, a Liu strategist, backfired on Cao's warships and thus routed him in this important battle.

Enduring his most shameful failure, Cao fled. He confronted with two choices - the main road with no sign of danger but took a longer time to reach or the winding mountainous Huarong Dao route with signs of wispy beacon-fire and smoke suggesting ambush. Which road would you take, if you were Cao?

After all, Well, Cao chose the latter option. one, which Though seemingly hinted of a trap, because he thought he second guessed that it was Zhuge's scheme trying to induce entire him to take the main road by faking its safety. Unfortunately, he was wrong.

Cao was such a sensitive and suspicious man that Zhuge, the most intelligent strategist in the book, could easily see through his mind. Zhuge deliberately made a signs of smoke on the cranky craggy mountain route.  track, knowing that Cao would assume that the ambush was, on the contrary, plotted on the main road. He used reversed psychology.

However, Luckily for Cao, he was not captured in Huarong Dao even though he chose made the wrong choice. road, because He was set free by Guan Yu even though he was a loyal and devoted general in Liu's camp/service bloc. It was another interesting story in the Romance of Three Kindoms, this novel; another example  associated with the dealing in the principles of Game Theory,too.

Considering Zhuge's and Cao's strategies, neither side became the ultimate winner because of incomplete information.  it was actually an incomplete information dynamic game. Zhuge, who was able to read his rival's mind was unable to fortell the treachery of Guan Yu. , was not surprisingly the winner.

So Therefore I think that the Game Theory is also about being a mind reader only a set of hypotheses without fortune telling capabilities.

--Question:
"A famous story from The Romance of the Three Kingdoms will perfectly explain the Game Theory."
Can I replace "story" by "event" and write : "A famous event from The Romance of the Three Kingdoms will... ." (Because the Chibi war was very significant)? Yes.  You can also use "incident".

I tried to retell the story as vividly as it was narrated in the book. But However, it was hard. Thanks for your the corrections!

The Ancient Chinese Practice of the Game Theory

I took my first Game Theory class last Wednesday morning. Game theory is, from my understanding, about how to make a strategic decisions so as to maximize your profit (also: pay-off. This term is often used in GT). A famous story from The Romance of the Three Kingdoms will perfectly explain the game theory.

In around A.D. 200, the there major political groups were respectively led respectively by Liu (the State of Shu), Cao (the State of Wei), and Sun (the State of Wu). Cao's bloc was usually considered the most powerful. In A.D. 208, Liu and Sun decided to join together forces ("to join forces" is a common expression) to fight against Cao in Chibi, on the waterside of the Changjiang River (or "on the banks of"). A sudden shift in the wind direction, predicted by Zhuge Liang, a strategist for Liu, set off a severe and plotted fire on Cao's warships and thus routed him in this important battle (This last sentence is not very clear: wind does not set off fires, rather it spreads them. Also "plot" is to plan secretly, it is not yet to act on the plan. So maybe this is what the story tells: "As Zhuge Liang, a strategist for Liu, predicted, a sudden shift in wind direction spread a fire they had started on Cao's warships, thus routing their opponents in this important battle".

Enduring Having suffered the most shameful failure defeat ever in his life, Cao fled. His men were confronted with two choices. One was the main road, which showed no sign of danger, but which would take longer time to traverse. The other was a winding mountain track called Huarong Dao, where a wisp of beacon-fire and smoke could be seen, suggesting an ambush (a beacon is a deliberate signal. If the fire was set up by ambushers it could only be unintentionally that its smoke was visible from afar). Which road would you take, if you were Cao?

After all, Cao chose the latter one, which seemingly hinted at a trap, because he thought it was Zhuge's scheme plan trying to try to induce him to take the main road by faking its safety (here "plan" is clearer. "Scheme" suggests a more complex plan. You could also have said: "it was part of Zhuge's scheme to try to induce him...). Unfortunately, he was wrong.

Cao was such a sensitive and suspicious man that Zhuge, the most intelligent strategist in the book, could easily see through his mind. Zhuge deliberately made a sign of smoke on the cranky craggy mountain track, knowing that Cao would assume that the ambush was, on the contrary, plotted on the main road.

However, Cao was not captured in Huarong Dao, even though he chose the wrong road, because he was set free by Guan Yu, a loyal and devoted general in Liu's bloc. This was another interesting story in the Romance of Three Kindoms, also associated with the game theory,too.

Considering Zhuge's and Cao's strategies  the strategies available to Zhuge and Cao (if you're talking about a game in GT, what characterizes a game are the available strategies, not simply the one's the players chose or are predicted to choose, as your wording suggests), it was actually an incomplete information dynamic game. Zhuge, who read his rival's mind, was not surprisingly the winner.

So I think that the game theory is also about being a mind reader mind reading. (To say that GT is about being a mind reader hints at the idea that in order to understand or to apply the theory you have to be a mind reader yourself.)

--Question:
"A famous story from The Romance of the Three Kingdoms will perfectly explain the game theory."
Can I replace "story" by "event" and write : "A famous event from The Romance of the Three Kingdoms will... ." (Because the Chibi war was very significant)?

The word "event" does suggest something historical, something that really happened, though this is not a rigid rule. One can talk about the events in a work of fiction. However, if you want to make it clear that the "events" are fictional and not historical it is best to use the word "story". If you want something more neutral you can also say "narrative". 

I tried to retell the story as vividly as it was narrated in the book. But it was hard. Thanks for your correction!