9780716766308

This new text offers a wealth of diverse, intriguing applications to show where game theory works, where it doesn't, and why. Accessible to all college students, the book conveys the power, appeal, and beauty of game-theoretic logic, emphasizing problem solving over answers. Especially relevant for majors in economics/business and political science/international relations.

Joseph E. Harrington, Jr. is Professor of Economics at Johns Hopkins University. He has served on numerous editorial boards, including the RAND Journal of Economics, Foundations and Trends in Microeconomics, and the Southern Economic Journal. His research has appeared in top journals in a variety of disciplines including economics (e.g., the American Economic Review, Journal of Political Economy, and Games and Economic Behavior), political science (Economics and Politics, Public Choice), sociology (American Journal of Sociology), organizational behavior (Management Science), and psychology (Journal of Mathematical Psychology). He is a co-author of the leading textbook Economics of Regulation and Antitrust, which is currently in its fourth edition.

PART I: LAYING THE FOUNDATIONS CHAPTER 1: INTRODUCTION TO STRATEGIC REASONING 1.1 Who Wants To Be a Game Theorist? 1.2 A Sampling of Strategic Situations 1.3 Whetting Your Appetite: The Game of Concentration 1.4 Psychological Profile of a Player 1.4.1 Preferences 1.4.2 Beliefs 1.4.3 How Do Players Differ? 1.5 Playing the Gender Pronoun Game

CHAPTER 2: BUILDING A MODEL OF A STRATEGIC SITUATION2.1 Introduction2.2 Extensive Form Games: Perfect Information Baseball Galileo Galilei and the Inquisition Haggling at an Auto Dealership 2.3 Extensive Form Games: Imperfect Information Mugging U.S. Court of Appeals for the Federal Court The Iraq War and Weapons of Mass Destruction 2.4 What is a Strategy? 2.5 Strategic Form Games Tosca Competition for Elected Office The Science 84 Game 2.6 Moving from the Extensive Form and Strategic Form Baseball Galileo Galilei and the Inquisition Haggling at an Auto Dealership 2.7 Going from the Strategic Form to the Extensive Form 2.8 Common Knowledge 2.9 A Few More Issues in Modeling Games PART II: SOLVING STRATEGIC FORM GAMES CHAPTER 3: ELIMINATING THE IMPOSSIBLE: SOLVING A GAME WHEN RATIONALITY IS COMMON KNOWLEDGE 3.1 Introduction 3.2 Solving a Game When Players Are Rational 3.2.1 Strict Dominance White Flight and Racial Segregation in Housing Banning Cigarette Advertising on Television 3.2.2 Weak Dominance 3.2.3 Bidding at an AuctionThe Proxy Bid Paradox at eBay 3.3 Solving a Game When Players Are Rational and Players Know Players Are Rational Team-Project Game Existence of God Game Boxed Pigs Game 3.4 Solving a Game When Rationality is Common Knowledge 3.4.1 The Doping Game: Is it Rational for Athletes to Use Steroids? 3.4.2 Iterative Deletion of Strictly Dominated Strategies 3.5 Appendix: Strict and Weak Dominance 3.6 Appendix: Rationalizability (Advanced) CHAPTER 4: STABLE PLAY: NASH EQUILIBRIA IN DISCRETE GAMES WITH TWO OR THREE PLAYERS 4.1 Defining Nash Equilibrium 4.2 Classic Two-Player Games Prisoners' Dilemma A Coordination Game: Driving Conventions A Game of Coordination and Conflict: Telephone An Out-guessing Game: Rock-Paper-Scissors Conflict and Mutual Interest in Games 4.3 Best-Reply Method 4.4 Three-player Games American Idol Fandom Voting: Sincere or Devious? Promotion and Sabotage 4.5 Foundations of Nash Equilibrium 4.5.1 Relationship to Rationality is Common Knowledge 4.5.2 The Definition of a Strategy, Revisited 4.6 Appendix: Nash Equilibrium CHAPTER 5: STABLE PLAY: NASH EQUILIBRIA IN DISCRETE N-PLAYER GAMES 5.1 Introduction 5.2 Symmetric Games The Sneetches Airline Security Operating Systems: Mac or Windows? Applying for an Internship 5.3 Asymmetric Games Entry into a Market Civil Unrest 5.4 Selecting Among Nash Equilibria CHAPTER 6: STABLE PLAY: NASH EQUILIBRIA IN CONTINUOUS GAMES 6.1 Introduction 6.2 Solving for Nash Equilibria without Calculus Price Competition with Identical Products Neutralizing Price Competition with Price-Matching Guarantees Competing for Elected Office 6.3 Solving for Nash Equilibria with Calculus (optional) Price Competition with Differentiated Products Tragedy of the Commons: Extinction of the Wooly Mammoth Charitable Giving and the Power of Matching Grants CHAPTER 7: KEEP 'EM GUESSING: RANDOMIZED STRATEGIES 7.1 Police Patrols and the Drug Trade 7.2 Making Decisions under Uncertainty 7.2.1 Probability and Expectation 7.2.2 Preferences over Uncertain Options 7.2.3 Ordinal vs. Cardinal Payoffs 7.3 Mixed Strategies and Nash Equilibrium 7.3.1 Back on the Beat 7.3.2 Some General Properties of a Nash Equilibrium in Mixed Strategies 7.4 Examples Avranches Gap in World War II Entry into a Market 7.5 Advanced Examples Penalty Kick in Soccer Slash’em Up: Friday the 13th Bystander Effect 7.6 Games of Pure Conflict and Cautious Behavior 7.7 Appendix: Formal Description of Nash Equilibrium in Mixed Strategies PART III: SOLVING EXTENSIVE FORM GAMESCHAPTER 8: TAKING TURNS: SEQUENTIAL GAMES OF PERFECT INFORMATION 8.1 Introduction 8.2 Backward Induction and Subgame Perfect Equilibrium 8.3 Examples Cuban Missile Crisis Enron and Prosecutorial Prerogative Racial Discrimination and Sports 8.4 Waiting Games: Pre-emption and Attrition 8.4.1 Pre-emption 8.4.2 War of Attrition 8.5 Do People Reason Using Backward Induction? 8.5.1 Experimental Evidence and Backward Induction 8.5.2 A Logical Paradox with Backward Induction CHAPTER 9: TAKING TURNS IN THE DARK: SEQUENTIAL GAMES OF IMPERFECT INFORMATION 9.1 Introduction 9.2 Subgame Perfect Nash Equilibrium British Intelligence 9.3 Examples OS/2Agenda Control in the Senate 9.4 Commitment 9.4.1 Entry Deterrence 9.4.2 Managerial Contracts and Competition: East India Trade in the 17th Century PART IV: GAMES OF INCOMPLETE INFORMATION CHAPTER 10: I KNOW SOMETHING YOU DON'T KNOW: GAMES WITH PRIVATE INFORMATION 10.1 Introduction 10.2 A Game of Incomplete Information: The Munich Agreement 10.3 Bayesian Games and Bayes-Nash Equilibrium Gunfight in the Wild West 10.4 When All Players Have Private Information: Auctions Independent Private Values and Shading Your Bid Common Value and the Winner's Curse 10.5 Voting on Committees and Juries Strategic Abstention Sequential Voting in the Jury Room 10.6 Appendix: A More Formal Definition of Bayes-Nash Equilibrium 10.7 Appendix: First Price Sealed Bid Auction with a Continuum of Types 10.7.1 Independent Private Values 10.7.2 Common Value CHAPTER 11: WHAT YOU DO TELLS ME WHO YOU ARE: SIGNALING GAMES 11.1 Introduction 11.2 Perfect Bayes-Nash Equilibrium Management Trainee 11.3 Examples Lemons and the Market for Used Cars Courtship Brinkmanship 11.4 Appendix: Bayes’ Rule and Updating Beliefs CHAPTER 12: LIES AND THE LYING LIARS THAT TELL THEM: CHEAP TALK GAMES 12.1 Introduction 12.2 Communication in a Game-Theoretic World 12.3 Signaling Information Defensive Medicine Stock Recommendations 12.4 Signaling Intentions 12.4.1 Pre-play Communication in Theory 12.4.2 Pre-play communication in Practice PART V: REPEATED GAMES CHAPTER 13: PLAYING FOREVER: REPEATED INTERACTION WITH INFINITELY-LIVED PLAYERS 13.1 Trench Warfare in World War I 13.2 Constructing a Repeated Game 13.3 Trench Warfare: Finite Horizon 13.4 Trench Warfare: Infinite Horizon 13.5 Some Experimental Evidence for the Repeated Prisoners’ Dilemma 13.6 Appendix: Present Value of a Payoff Stream 13.7 Appendix: Dynamic Programming CHAPTER 14: COOPERATION AND REPUTATION: APPLICATIONS OF REPEATED INTERACTION WITH INFINITELY-LIVED PLAYERS14.1 Introduction 14.2 A Menu of Punishments 14.2.1 Price-Fixing 14.2.2 Temporary Reversion to Moderate Rates 14.2.3 Price Wars: Temporary Reversion to Low Rates 14.2.4 A More Equitable Punishment 14.3 Quid Pro Quo U.S. Congress and Pork Barrel Spending Vampire Bats and Reciprocal Altruism 14.4 Reputation Lending to Kings Henry Ford and the $5 Workday 14.5 Imperfect Monitoring and Anti-Ballistic Missiles CHAPTER 15: INTERACTION IN INFINITELY-LIVED INSTITUTIONS 15.1 Introduction 15.2 Cooperation with Overlapping Generations Tribal Defense Taking Care of Your Elderly Parents Political Parties and Lame Duck Presidents 15.3 Cooperation in a Large Population eBay Medieval Law Merchant PART VI: EVOLUTIONARY GAME THEORY AND BIOLOGY CHAPTER 16: EVOLUTIONARY GAME THEORY AND BIOLOGY: EVOLUTIONARILY STABLE STRATEGIES 16.1 Introducing Evolutionary Game Theory 16.2 Hawk-Dove Conflict 16.3 Evolutionarily Stable Strategy “Stayin’ Alive” on a Cowpat 16.4 Properties of an ESS Side-blotched Lizards 16.5 Multi-population Games Parental Care 16.6 Evolution of Spite CHAPTER 17: EVOLUTIONARY GAME THEORY AND BIOLOGY: REPLICATOR DYNAMICS 17.1 Introduction 17.2 Replicator Dynamics and Hawk-Dove 17.3 General Definition of the Replicator Dynamic 17.4 ESS and Attractors of the Replicator Dynamic 17.5 Examples of Strategic Situations Stag Hunt Handedness in Baseball Evolution of Cooperation

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Games, Strategies and Decision Making

Games, Strategies and Decision Making

0716766302

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