lecture13 - Game Theory Mike Shor Lecture 13...

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Game Theory “Necessity never made a good bargain.” - Benjamin Franklin Mike    Shor Lecture 13
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Economic Markets Allocation of scarce resources traditional markets auctions bargaining Mike Shor 2
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Role of Game Theory Mike Shor 3 Design non-traditional markets Charles  R iver  Associates
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The Move to                                 Game- Theoretic Bargaining Baseball Each side submits an offer to an arbitrator who must chose one of the proposed results Meet-in-the-Middle Each side proposes its “worst acceptable offer” and a deal is struck in the middle, if possible Forced Final If an agreement is not reached by some deadline, one party makes a final take-it-or-leave-it offer Mike Shor 4
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Art: Negotiation Science: Bargaining Game theory’s contribution: to the rules of the encounter CAVEAT: Limited Applicability Mike Shor 5
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Outline Importance of rules: The rules of the game determine the outcome Diminishing pies: The importance of patience Estimating payoffs: Trust your intuition Mike Shor 6
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Consider the following bargaining game (over a cake): I name a take-it-or-leave-it split If you accept, we trade If you reject, no one eats! Under perfect information, there is a
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This note was uploaded on 03/04/2012 for the course MGT 425 taught by Professor Shor during the Spring '11 term at Vanderbilt.

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lecture13 - Game Theory Mike Shor Lecture 13...

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