Game Theory: A Nontechnical Introduction To The Analysis Of Strategy (Fourth Edition)

This fourth edition of Game Theory: An Introduction uses teaching by example and the Karplus Learning Cycle to convey the ideas of game theory in an approachable, intuitive, and interdisciplinary way. It introduces noncooperative equilibrium concepts, discusses cooperative solutions, rationalizable strategies, and correlated equilibria, and applies them to elections, social mechanism design, and larger-scale games.

Format: Hardback
Length: 548 pages
Publication date: 21 June 2023
Publisher: World Scientific Publishing Co Pte Ltd

This fourth edition of the book, like its predecessors, employs a teaching approach centered around exemplification and the Karplus Learning Cycle to effectively convey the principles of game theory in a manner that is accessible, intuitive, and interdisciplinary. The book systematically introduces noncooperative equilibrium concepts such as Nash equilibrium, mixed strategy equilibria, and subgame perfect equilibrium in the first half. Additionally, a brief introduction to Bayesian Nash equilibrium is provided. The subsequent chapters delve into cooperative solutions with and without side payments, rationalizable strategies, and correlated equilibria, exploring their applications in elections, social mechanism design, and larger-scale games. To enhance the understanding of these concepts, new examples are included, such as panic buying during a pandemic, supply-chain shifts caused by global warming, and other relevant contemporary scenarios. By employing this approach, the book aims to provide a comprehensive and engaging introduction to game theory for students and scholars from various fields.

Introduction:
This fourth edition of the book, like its predecessors, employs a teaching approach centered around exemplification and the Karplus Learning Cycle to effectively convey the principles of game theory in a manner that is accessible, intuitive, and interdisciplinary. The book systematically introduces noncooperative equilibrium concepts such as Nash equilibrium, mixed strategy equilibria, and subgame perfect equilibrium in the first half. Additionally, a brief introduction to Bayesian Nash equilibrium is provided. The subsequent chapters delve into cooperative solutions with and without side payments, rationalizable strategies, and correlated equilibria, exploring their applications in elections, social mechanism design, and larger-scale games. To enhance the understanding of these concepts, new examples are included, such as panic buying during a pandemic, supply-chain shifts caused by global warming, and other relevant contemporary scenarios. By employing this approach, the book aims to provide a comprehensive and engaging introduction to game theory for students and scholars from various fields.

Noncooperative Equilibrium Concepts:
In the first half of the book, the authors focus on systematically introducing noncooperative equilibrium concepts such as Nash equilibrium, mixed strategy equilibria, and subgame perfect equilibrium. These concepts are fundamental in game theory and provide a framework for understanding the strategic interactions between players. Nash equilibrium is a solution concept that represents the optimal choice of a player given the choices of other players. It is based on the idea that each player is rational and seeks to maximize their own payoff while taking into account the actions of other players. Mixed strategy equilibria are solutions where players adopt a combination of strategies rather than a single strategy. They arise when players have multiple options and can benefit from coordinating their actions. Subgame perfect equilibrium is a refinement of Nash equilibrium that takes into account the possibility of sequential moves by players. It represents the best response of a player to a sequence of moves by other players, assuming that the players are aware of the previous moves and can predict the future moves.

Cooperative Solutions:
The subsequent chapters of the book explore cooperative solutions with and without side payments. Cooperative solutions involve players working together to achieve a common goal or maximize their joint payoff. Without side payments, players may have incentives to defect from the cooperative solution, as they can benefit by pursuing their own self-interest. However, with the introduction of side payments, players can be incentivized to stay in the cooperative solution, as they receive additional benefits for cooperating. The authors discuss various strategies and mechanisms that can be used to promote cooperation, such as punishment, reward, and reputation systems.

Rationalizable Strategies:
The book also delves into rationalizable strategies, which are strategies that can be implemented by players based on their rational beliefs about the game. Rationalizable strategies are important in game theory as they provide a way to analyze and predict the behavior of players in complex situations. The authors discuss various approaches to rationalizing strategies, such as backward induction, dynamic programming, and game tree search.

Correlated Equilibria:
Correlated equilibria are solutions where the actions of players are dependent on each other's actions. They arise when players have strategic interactions and can benefit from coordinating their actions. The authors discuss various types of correlated equilibria, such as stable equilibria, unstable equilibria, and mixed equilibria.

Applications to Elections:
One of the applications of game theory is in the analysis of elections. The authors discuss how game theory can be used to model and predict the outcomes of elections, including the use of strategic voting, coalition formation, and voter turnout. They also discuss the role of political parties, interest groups, and media in shaping election outcomes.

Social Mechanism Design:
Game theory is also used in the design of social mechanisms, such as incentive structures, auctions, and voting systems. The authors discuss how game theory can be used to optimize the performance of these mechanisms and ensure that they are fair and efficient.

Larger-Scale Games:
Finally, the book discusses larger-scale games, which involve multiple players and have significant economic or social implications. The authors discuss how game theory can be used to analyze and predict the behavior of players in these games, including the use of game theory-based algorithms for solving complex optimization problems.

In conclusion, this fourth edition of the book provides a comprehensive and engaging introduction to game theory for students and scholars from various fields. By employing a teaching approach centered around exemplification and the Karplus Learning Cycle, the authors effectively convey the principles of game theory in a manner that is accessible, intuitive, and interdisciplinary. The book covers a wide range of topics, including noncooperative equilibrium concepts, cooperative solutions, rationalizable strategies, correlated equilibria, applications to elections, social mechanism design, and larger-scale games. The inclusion of new examples and contemporary scenarios further enhances the understanding of these concepts and their relevance in today's world. Whether you are a student of economics, psychology, computer science, or any other field, this book will provide you with the tools and insights necessary to understand and apply game theory in your research and practice.

Weight: 946g
Dimension: 159 x 237 x 38 (mm)
ISBN-13: 9789811262951