A_Course_in_Game_Theory_-_Martin_J._Osborne 17

A_Course_in_Game_Theory_-_Martin_J._Osborne 17 - theory of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Page 1 1 Introduction 1.1 Game Theory Game theory is a bag of analytical tools designed to help us understand the phenomena that we observe when decision-makers interact. The basic assumptions that underlie the theory are that decision-makers pursue well- defined exogenous objectives (they are rational ) and take into account their knowledge or expectations of other decision-makers' behavior (they reason strategically ). The models of game theory are highly abstract representations of classes of real-life situations. Their abstractness allows them to be used to study a wide range of phenomena. For example, the theory of Nash equilibrium (Chapter 2) has been used to study oligopolistic and political competition. The theory of mixed strategy equilibrium (Chapter 3) has been used to explain the distributions of tongue length in bees and tube length in flowers. The
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: theory of repeated games (Chapter 8) has been used to illuminate social phenomena like threats and promises. The theory of the core (Chapter 13) reveals a sense in which the outcome of trading under a price system is stable in an economy that contains many agents. The boundary between pure and applied game theory is vague; some developments in the pure theory were motivated by issues that arose in applications. Nevertheless we believe that such a line can be drawn. Though we hope that this book appeals to those who are interested in applications, we stay almost entirely in the territory of "pure" theory. The art of applying an abstract model to a real-life situation should be the subject of another tome. Game theory uses mathematics to express its ideas formally. However, the game theoretical ideas that we discuss are not inherently mathemat-...
View Full Document

This note was uploaded on 09/10/2011 for the course DEFR 090234589 taught by Professor Vinh during the Spring '10 term at Aarhus Universitet, Aarhus.

Ask a homework question - tutors are online