GAME THEORY WASN'T MEANT TO BE A FORECASTING TOOL You may have come away from Michael J. Mandel's review of A Beautiful Mind (''The tortured genius behind game theory,'' Books, June 22) with a negative attitude toward the book and game theory itself. All models break down at some level because they are merely simplified versions of life and cannot possibly control for all variables. Game theory, too, often fails to forecast with precision, yet this is not its purpose. Game theory is simply a method of modeling how players interact. It is an effective method for analyzing all available data so that the modeler can better understand how decisions are reached interdependently, given the assumptions of the model. I use game theoretic equations in business and in life, not with the expectation that all outcomes will be optimal, but rather that ''bad'' decisions will be minimized. It is a useful tool that can model simplistic scenarios, as well as the highly complex. Corporations (and individuals) would likely benefit from a rigorous understanding of how to incorporate game theory into everyday life. William B. Hakes Executive Vice-President Statistical Advisers Inc. Atlanta

Updated July 1, 1998 by bwwebmaster
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