Welcome to Game Theory
- to introduce the learner to the basics of the Game Theory
- to understand the basic ideas behind the key concepts in game theory, such as equilibrium, rationality, and cooperation.
- to provide a general framework to describe and analyze how individuals behave in such “strategic” situations
- The reason why we need game theory to analyze social problems
- Nash equilibrium as a unified solution concept
- The reason why players come to play Nash equilibrium
- The relationship between intellectual capacity of players and Nash equilibrium
- The relationship between the rationality of individuals and socially desirable outcomes
- 2. Understanding Nash equilibriumThe basic solution concept of game theory is Nash equilibrium. In Module 2, we try to understand this central concept through various examples and ask the following crucial question: how do players come to play a Nash equilibrium?
- 1. Why Do We Need Game Theory, and What Does it Tell Us?Is it possible to analyze a wide variety of social and economic problems using a unified framework? In the first module, we address this question. We will see that the concept of rational decision making is useful, but it is not quite sufficient to provide governing principles. Motivated examples and some history of game theory will be provided. You will also be asked to play a simple card game to see how it feels to make your decisions strategically.
- 3. Rationality, Knowledge, and Evolution in GamesIn Module 3, we will dig deeper into the relationship between rationality and Nash equilibrium. We will consider the whole spectrum of possible intellectual capacities of players, spanning the range from unlimited ability for sophisticated reasoning to absolute zero intelligence. In the end, you will see that Nash equilibrium can emerge under a fairly wide range of intellectual capacities of players.
- 4. Sustaining CooperationThe final module is devoted to the most important and most general message of game theory: rational behavior quite often leads to a socially undesirable outcome. We will first try to understand the basic reason for this, and then see how this insight of game theory has made fundamental impacts in the natural and social sciences. Finally, we will learn some general methods to overcome this problem.
- Barron, E. N. (2013). Game Theory : An Introduction (Vol. Second edition). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=565752
- Gibbons, R. (1992). Game Theory for Applied Economists. Princeton: Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=390677
- Binmore, K. G. (2007). Game Theory: A Very Short Introduction. New York: OUP Oxford. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=209659
- Tamer Başar, Georges Zaccour. Handbook of Dynamic Game Theory, 2018, Springer