Game theory for storytellers: what a Yale economics course teaches about brand stories

By Jim Lounsbury, filmmaker and author of Storification

On the first day of his game theory course at Yale, Professor Ben Polak hands out a sheet of paper and asks every student to make a secret choice: Alpha or Beta, and here are the rules:

• If you and your classmate both choose Alpha: You both get a B-.
• If you both choose Beta: You both get a B+.
• If you choose Alpha and your classmate chooses Beta: You get an A, but your classmate gets a C.

Alpha is tempting because, whatever your classmate chooses, you have a chance to do better personally. If they choose Beta, you get an A. If they choose Alpha, you avoid the risk of getting a C.

In Polak's class, 238 chose Alpha and just 36 chose Beta.

The problem? If everyone had chosen Beta, everyone would have received a better grade than if they'd all chosen Alpha.

The lesson is that when everyone looks out for themselves, everyone can end up worse off. What seems like the smartest individual decision doesn't always produce the best collective outcome.

In short: Game theory studies how people choose when their choices depend on each other. It explains why most marketing fails (it's a prisoner's dilemma) and why some brand stories travel. A good story changes what people value, turning a game everyone loses into one everyone wants to play. Each of the five steps in Storification (Origin, Worldview, Invitation, Participation and Amplification) lines up with an idea from Polak's course.

What does this have to do with brand storytelling?

Think about how most companies market themselves.

They compete for attention by shouting louder, making bigger promises, pushing more promotions and trying to convince customers that their product is the best. Every brand makes the same Alpha choice: I need to win this customer's attention, even if everyone else loses.

But when every brand does this, customers become overwhelmed, sceptical and less likely to believe any of them. The whole marketplace becomes noisier, and every brand has to work harder to stand out.

Storytelling offers a different approach. Instead of simply trying to win attention, a brand can build a shared sense of meaning with its audience. It can communicate what it believes, show that it understands people's lives and give people something worth connecting with and sharing.

The goal shifts from winning a single transaction to building a relationship.

That's the connection to Storification: the most powerful brand stories don't just help a company win. They give people a reason to participate in something bigger than the transaction itself.

Most marketing is a prisoner's dilemma

Think about it from both sides. Brands shout louder, discount harder and interrupt more often, because if they don't, a competitor will. Customers respond by tuning out, blocking ads and trusting nothing. Each side is acting rationally. Everyone loses.

Polak's first lesson is "Do not play a strictly dominated strategy," and in a prisoner's dilemma that logic pushes everyone toward the bad outcome. So how do you get out?

The way out: change the payoffs

Halfway through that first lecture, Polak changes one thing. He asks the students to imagine they care how their partner feels: guilty about taking an A at someone else's expense, or unhappy about being the one who got the C. The grades stay the same. Only what people value changes. And the game transforms. It's no longer a prisoner's dilemma but a coordination game, where everyone does best by choosing together.

His conclusion: "payoffs matter."

That's what a brand story does. It doesn't change your product. It changes what people get out of choosing it: belonging, identity, meaning, a story to tell.

Polak's other early lesson is the heart of strategic thinking, and of storytelling: "Put yourself in others' shoes and try to figure out what they will do." Every step of a brand story starts there.

The five steps, through game theory

1. Origin: costly signals

Polak's lecture on asymmetric information deals with a problem every founder faces. You know your business is good. Your customer doesn't. Saying so is cheap, and anyone can say it. What helps is a costly signal: something that would be too expensive to fake if it weren't true.

A great origin story is a costly signal. Examples of this? Sara Blakely put about $5,000 of her own savings into Spanx and spent two years developing it before launch... or Bill Bowerman, the founder of Nike, ruined his wife's waffle iron making running shoes. Those details are believable because they cost something.

For your story: Don't just say why you care. Show what it cost you to start.

2. Worldview: commitment

In his lectures on backward induction, Polak shows that an advantage often comes not from moving first but from commitment: locking yourself into a course of action so others can count on it.

A worldview is a commitment. When Patagonia ran a full-page ad in The New York Times on Black Friday 2011 saying "Don't Buy This Jacket", it told customers it would rather sell less than encourage waste. When Yvon Chouinard transferred ownership of the company to a trust and a non-profit in 2022, he wrote that "Earth is now our only shareholder." Nobody doubts what Patagonia believes, because it has closed off the alternatives.

For your story: A purpose that costs you nothing commits you to nothing. Ask what your belief stops you from doing.

3. Invitation: coordination

Polak's lecture on Nash equilibrium uses "bad fashion and bank runs" to show how groups can settle on very different outcomes depending on what each person expects the others to do. Unlike a prisoner's dilemma, he notes, a coordination problem can often be solved simply by communication.

A brand story is that communication. It gives a group a shared point to gather around: the obvious choice, the brand "people like us" use. People rarely choose alone. They choose what they expect others like them to choose.

For your story: Make the invitation clear enough that your audience can picture who else is joining.

4. Participation: repeated games

In a one-off game, cheating pays. In a repeated game, it doesn't, because the future matters. Polak's lectures on repeated games show that cooperation holds when promises and threats are credible and the relationship is likely to continue.

A transaction is a one-off game. Participation turns it into a repeated one. When customers take part (they review, share, co-create, return), both sides have a reason to keep their promises.

For your story: Give people a role that continues after the sale.

5. Amplification: reputation and other people's shoes

People share what they think other people will value. Every share is a small prediction about other minds, which is exactly Polak's "put yourself in others' shoes" lesson, played by your audience instead of you. And over a long series of repeated games, the result is reputation: Polak devotes a lecture to how it shapes what others expect you to do.

For your story: Make the story easy to retell, and make the teller look good telling it.

The map at a glance

Try this today

Draw a simple two-by-two grid. On one side, your customer's choices: ignore you or engage. On the other, yours: push harder or tell a better story. In each box, write what each side actually gets. If "ignore" beats "engage" for your customer in every box, no amount of shouting will change the result. Ask what your story could add to the "engage" box that makes it worth choosing.

Watch the course

Ben Polak's Game Theory (ECON 159) was recorded at Yale in 2007 and is free on Open Yale Courses. If you only watch one lecture, make it the first: the grade game is the clearest explanation of why trust is so hard to build, and why stories matter so much when it is.

FAQ

What is game theory, in simple terms? Game theory is the study of how people make decisions when the outcome depends on what others choose too. It's used in economics, politics and biology, and it explains a lot about marketing, because every brand's success depends on choices its customers make.

How does game theory apply to marketing? Much of marketing is a prisoner's dilemma: brands compete for attention, customers tune out, and both lose. Game theory shows the way out is changing the payoffs, giving people a reason to engage that's worth more to them than ignoring you. A good brand story does that.

What is a costly signal in branding? A costly signal is proof that would be too expensive to fake. Founders who risked their savings, brands that turn down sales to keep a principle, and guarantees that would bankrupt a bad business are all costly signals. They're believed because they cost something.

Who is Ben Polak? Ben Polak is a professor of economics at Yale University. His introductory game theory course, ECON 159, is one of the best-known free courses on Open Yale Courses.

What are the five steps of Storification? Origin (why you started), Worldview (what you believe), Invitation (the role you offer people), Participation (what they do with you) and Amplification (why they tell others). Together they turn a business into a story people pass on.

Sources

• Ben Polak, ECON 159: Game Theory, Open Yale Courses (Yale University, 2007), licensed CC BY-NC-SA: https://oyc.yale.edu/node/668
• Lecture 1 transcript, "Introduction: five first lessons": https://hanson2010.github.io/econ159-game-theory/contents/transcripts/transcript01.html
• Course lecture list and overviews: https://hanson2010.github.io/econ159-game-theory/contents/sessions.html
• Patagonia, "Don't Buy This Jacket, Black Friday and the New York Times": https://www.patagonia.com.au/blogs/stories/dont-buy-this-jacket
• Al Jazeera, "Patagonia owner Yvon Chouinard gives company away to save planet" (September 2022): https://www.aljazeera.com/amp/news/2022/9/15/patagonia-owner-yvon-chouinard-gives-away-company-to-save-planet

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Jim Lounsbury is a filmmaker who has made films and brand stories in more than 20 countries. His work has been seen in cinemas and on the world's most viewed networks, including Apple TV, Prime Video, STAN, National Geographic, and more. He works with organisations and start-ups to find and tell their story. His book, Storification, is out 20 November 2026. Pre-order it here.