I loved the movie, "A Beautiful Mind," starring Russell Crowe. However, I did not much care for its treatment of game theory or economics.
The movie showed Nash arguing that if everyone else hits on the blonde, he should hit on the brunette and he'd be more likely to get lucky. That is pretty simplistic; if everyone thinks the way he does, then everyone will hit on the brunette, and he will be more likely to get lucky with the blonde. Most likely a mixed strategy is called for in situations like this. Or better yet, wait to see what the others do.
And Peter Foster [via Jack] rightly attacks the movie's criticism of Adam Smith and "the invisible hand":
The violence done to Smith in A Beautiful Mind was just one in a long series of misinterpretations and attacks, which at least confirmed Smith’s continued iconic status. To rationalist intellectuals, Smith’s “natural order” has always seemed not merely implausible but downright objectionable, not to mention leaving them little room in which to exercise their own large brains and acute moral sentiments. ...
What sort of guidance does the hand provide? Friedrich Hayek gave perhaps the clearest explanation of its ministrations in his seminal article “The Use of Knowledge in Society.” Hayek pointed out that the issue in commerce wasn’t one of planning versus non-planning, but of who should do the planning, and at what level. He noted that everybody plans according to their own perspectives and desires. The sort of knowledge people use in such planning is not analogous to scientific knowledge. It is “knowledge of the particular circumstances of time and place.” It cannot be known by others, much less in toto by any individual or group. It cannot be captured by statistics or fed into government economic plans.
The key question is how to utilize all this dispersed knowledge. That is what the market does, by providing a vast arena for promoting, judging and rewarding efficiency and innovation. This fact, wrote Hayek, is a “marvel” but an unacknowledged and underappreciated one. Not only is the market not “designed,” but those who participate in it “usually do not know why they are made to do what they do.” This, suggested Hayek, is a good thing. He quoted the Cambridge philosopher Alfred North Whitehead, who had pointed out that “civilization advances by extending the number of important operations which we can perform without thinking about them.”
However, there is a downside to this unconscious aspect of the natural order. If you don’t have to think about it, you don’t have to understand or appreciate it, and you become more vulnerable to taking “thoughtful” actions — or pursuing policies — that might damage or destroy it.