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Unformatted text preview: 6.254 : Game Theory with Engineering Applications Lecture 1: Introduction Asu Ozdaglar MIT February 2, 2010 1 Game Theory: Lecture 1 Introduction Optimization Theory: Optimize a single objective over a decision variable x R n . minimize i u i ( x ) subject to x X R n . Game Theory: Study of multiperson decision problems Used in economics, political science, biology to understand competition and cooperation among agents. role of threats/punishments in long term relations. Models of adversarial behavior (strictly competitive strategic interactions, modeled as zero sum games). Pursuitevasion games. 2 Game Theory: Lecture 1 Introduction Game Theory (Continued): Recent interest in networkedsystems (communication and transportation networks, electricity markets). Largescale networks emerged from interconnections of smaller networks and their operation relies on various degrees of competition and cooperation. Online advertising on the Internet: Sponsored search auctions. Distributed control of competing heterogeneous users. Information evolution and belief propagation in social networks. Model: n agents , each chooses some x i R , and has a utility function u i ( x ) , x R n , or equivalently u i ( x i , x i ) , x i = ( x 1 , . . . , x i 1 , x i + 1 , . . . , x n ) . What are the possible outcomes? Steadystate, stable operating point, characteristics? How do you get there (learning dynamics, computation of equilibrium)? 3 Game Theory: Lecture 1 Introduction Mechanism Design (MD): Inverse Game Theory: Design of a game (or incentives) to achieve an objective (eg. systemwide goal or designers selfish objective) Optimization theory extended for systems in which there are independent agents not under direct control, and must be coerced through the use of incentives. Focal example: Internet Users interest to skimp on congestion control ISPs interest to lie about routing information. In Economics, MD is all about designing the right incentives. In CS/Engineering, focus is more on the design of efficient decentralized protocols that take into account incentives. 4 Game Theory: Lecture 1 Course Information Introduction to fundamentals of game theory and mechanism design....
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This note was uploaded on 05/08/2010 for the course CS 6.254 taught by Professor Asuozdaglar during the Spring '10 term at MIT.
 Spring '10
 AsuOzdaglar

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