Week
1
1.
Game
theory is the science of rational
behavior in interactive
situations. What is meant by ‘interactive’?
That what counts as optimal for each party partly depends on what other
parties do. What is meant by rational?
Merely that parties have objectives, and that their actions are selected
so as to aim at bringing these objectives about.
2.
Parametric choice: trying to optimize
in circumstances where all the relevant parameters are independent of your
decision. Some parameters might be unknown
to you, but none are hiding from
you or changing because you’re
thinking about them.
Non-parametric
choice:
some parameters relevant to your
optimizing are interacting with your decision.
3.
Major
figures in the history of game theory:
Thomas Hobbes (1588 – 1679); basic logic of games
David Hume (1711 – 1776); basic logic of normative coordination
Antoine Cournot (1801-1877); logic of business competition
Joseph Bertrand (1822-1900); logic of business
competition
John von Neumann
(1903-1957); mathematics of 2-person zero-sum games; the founder of game
theory
John Nash (1928 - ); general concept for solving
games
Nobel Prize –winning game theorists: Nash, Reinhardt
Selten, John Harsanyi, Thomas Schelling, Robert Aumann
4.
Game
#1: Soldiers in the face of the enemy
5.
Game
#2: Cortez bluffs and conquers Mexico.
6.
Game
#3: Henry V’s murderous morale-boosting
7.
Game
#4: Mixing: Tennis (down the line or cross-court? ) / Normandy landing (which beach)
8.
Game
#5: Two-person Prisoner’s Dilemma: prisoners
/ business competitors
9.
Game
#6: Many-person Prisoner’s Dilemma
(students / the world’s fishing
fleets)
10.
Game
#7: Splitting surpluses: People in markets / nations in international trade
11.
Game
#8: Coordinating liars / coordinating diners
12.
Game
#9: Commitment: professors and excuses / governments and terrorists
13.
Game
#10: Brinkmanship: chicken / firms and unions
14.
Game
#11: Signaling: asset sacrifice /
getting a degree