The Strategy of Conflict by Thomas Schelling

This book was published in 1960, and the author eventually won the Nobel Prize in economics in 2005 for his work in game theory. Forty eight years out of date, this book is fascinating: Schelling elucidates his deep thought so well, fleshing out his significant contributions with numerous real world examples.

Schelling's main contribution is to show that game theory need not concern itself only with the two person zero sum model. Competition often occurs with the possibility of negotiation, with outcome "payoffs" varying depending on the situation. War, for example, is not zero sum, nor are strikes, or business deals. But negotiations are not always possible, nor desirable, and sometimes actions speak louder than words.

Why did the Soviet Union and the USA each have enough nuclear bombs to blow up the world 200 times? Just insane, right? No, not at all! The bombs are effective defensively as deterrents if they can survive a first strike attack. So say the Soviets sent everything over, decimating 99% of the US nuclear force. Then the US would have responded with 1% of its original force - still enough to have wiped out almost all of the Soviet Union. It turns out that the seemingly uncontrolled arms "race" was just a way of making the world more secure!

Schelling book is filled with gems, insights into the anomolies of this world, and I recommend him to anyone.