Introduction to Game Theory
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.ppt   Introduction to Game Theory.ppt (Size: 199.5 KB / Downloads: 59)
Game theory is a distinct and interdisciplinary approach to the study of human behavior. Game theoretic concepts apply whenever the actions of several agents are interdependent. The concepts of game theory provide a language to formulate, structure, analyze and understand strategic scenarios. In this seminar and presentation, I will talk about general concepts related to game theory, how games can be represented and general strategies to solve games
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02-05-2012, 03:28 PM

Game Theory

.ppt   Game Theory.ppt (Size: 275.5 KB / Downloads: 100)

The study of rational behavior among interdependent agents
Agents have a common interest to make the pie as large as possible, but

Agents have competing interests to maximize their own share of the pie.

An agent’s rational decisions require anticipating rivals’ responses

These expectations are not perfect, so uncertainty is a necessary feature of games


Tchaikovsky confesses also

Both get 8 years, even though if they cooperated, they could get off with one year each

For both, confession is a dominant strategy: a strategy that yields a better outcome regardless of the opponent’s choice


Nash Equilibrium: Neither player has an incentive to change strategy, given the other player’s choice
Both confess is a Nash Equilibrium

Both don’t confess is not a Nash Equilibrium, rival will always want to renege

Dominant Firm Game

Either firm can announce an output level (lead) or else wait to see what the rival does and then produce an amount that does not saturate the market.

Bargaining Techniques

Note the similarity between these techniques and the games
Role of information
Role of history
Role of the other party’s objectives, actions
Role of cooperative vs competitive bargaining environment


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