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Games of strategy

Author: Dixit, Avinash ; Skeath, Susan ; Reiley, DavidPublisher: Norton 2009.Edition: 3rd ed.Language: EnglishDescription: 794 p. : Graphs/Ill. ; 26 cm.ISBN: 9780393931129Type of document: BookBibliography/Index: Includes bibliographical references and index and glossary
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Item type Current location Collection Call number Status Date due Barcode Item holds
Book Europe Campus
Main Collection
Print HB144 .D59 2009
(Browse shelf)
001250916
Available 001250916
Total holds: 0

Includes bibliographical references and index and glossary

Digitized

Games of Strategy Contents Preface to the Third Edition XX PART ONE Introduction and General Principles 1 Basic Ideas and Examples 3 1 WHAT IS A GAME OF STRATEGY? 4 2 SOME EXAMPLES AND STORIES OF STRATEGIC GAMES 6 A. Which Passing Shot? 6 B. The GPA Rat Race 7 C. "We Can't Take the Exam, Because We Had a Flat Tire" 9 D. Why Are Professors So Mean? 10 E. Roommates and Families on the Brink 11 F. The Dating Game 13 3 OUR STRATEGY FOR STUDYING GAMES OF STRATEGY 14 2 How to Think About Strategic Games 1 DECISIONS VERSUS GAMES 18 2 CLASSIFYING GAMES 20 A. Are the Moves in the Game Sequential or Simultaneous? 20 17 B. Are the Players' Interests in Total Conflict, or Is There Some Commonality? 21 C. Is the Game Played Once or Repeatedly, and with the Same or Changing Opponents? 22 D. Do the Players Have Full or Equal Information? 23 E. Are the Rules of the Game Fixed or Manipulable? 25 F. Are Agreements to Cooperate Enforceable? 26 3 SOME TERMINOLOGY AND BACKGROUND ASSUMPTIONS 27 A. Strategies 27 B. Payoffs 28 C. Rationality 29 D. Common Knowledge of Rules 31 E. Equilibrium 33 F Dynamics and Evolutionary Games 34 G. Observation and Experiment 35 4 THE USES OF GAME THEORY 36 5 THE STRUCTURE OF THE CHAPTERS TO FOLLOW 38 SUMMARY 41 KEY TERMS 42 EXERCISES 42 PART TWO Concepts and Techniques 3 Games with Sequential Moves 1 GAME TREES 48 A. Nodes, Branches, and Paths of Play 48 B. Uncertainty and "Nature's Moves" 48 C. Outcomes and Payoffs 50 D. Strategies 50 E. Tree Construction 51 2 SOLVING GAMES BY USING TREES 52 47 3 ADDING MORE PLAYERS 57 4 ORDER ADVANTAGES 62 5 ADDING MORE MOVES 63 A. Tic-Tac-Toe 63 B. Chess 65 C. Checkers 69 6 EVIDENCE CONCERNING ROLLBACK 71 7 STRATEGIES IN THE SURVIVOR GAME 74 SUMMARY 79 KEY TERMS 80 EXERCISES 80 4 Simultaneous-Move Games with Pure Strategies I: Discrete Strategies 1 DEPICTING SIMULTANEOUS-MOVE GAMES WITH DISCRETE STRATEGIES 90 2 NASH EQUILIBRIUM 92 A. Some Further Explanation of the Concept of Nash Equilibrium 93 B. Nash Equilibrium As a System of Beliefs and Choices 95 3 DOMINANCE 97 A. Both Players Have Dominant Strategies 98 B. One Player Has a Dominant Strategy 99 C. Successive Elimination of Dominated Strategies 102 4 BEST-RESPONSE ANALYSIS 104 5 THE MINIMAX METHOD FOR ZERO-SUM GAMES 106 6 THREE PLAYERS 108 7 MULTIPLE EQUILIBRIA IN PURE STRATEGIES 111 A. Will Harry Meet Sally? Pure Coordination 111 B. Will Harry Meet Sally? And Where? Assurance 113 C. Will Harry Meet Sally? And Where? Battle of the Sexes 115 D. Will James Meet Dean? Chicken 116 8 NO EQUILIBRIUM IN PURE STRATEGIES 118 SUMMARY 120 KEY TERMS 121 EXERCISES 121 89 5 Simultaneous-Move Games with Pure Strategies II: Continuous Strategies and III: Discussion and Evidence 133 1 PURE STRATEGIES THAT ARE CONTINUOUS VARIABLES 134 A. Price Competition 134 B. Some Economics of Oligopoly 138 C. Political Campaign Advertising 139 D. General Method for Finding Nash Equilibria 142 2 EMPIRICAL EVIDENCE CONCERNING NASH EQUILIBRIUM 143 A. Laboratory and Classroom Experiments 143 B. Real-World Evidence 146 3 CRITICAL DISCUSSION OF THE NASH EQUILIBRIUM CONCEPT 150 A. The Treatment of Risk in Nash Equilibrium 151 B. Multiplicity of Nash Equilibria 154 C. Requirements of Rationality for Nash Equilibrium 156 4 RATIONALIZABILITY 157 A. Applying the Concept of Rationalizability 158 B. Rationalizability Can Take Us All the Way to Nash Equilibrium 159 SUMMARY 163 KEY TERMS 163 EXERCISES 163 APPENDIX: Finding a Value to Maximize a Function 173 6 Combining Sequential and Simultaneous Moves 1 GAMES WITH BOTH SIMULTANEOUS AND SEQUENTIAL MOVES 178 A. Two-Stage Games and Subgames 178 B. Configurations of Multistage Games 182' 2 CHANGING THE ORDER OF MOVES IN A GAME 184 177 A. Changing Simultaneous-Move Games into Sequential-Move Games 185 B. Other Changes in the Order of Moves 192 3 CHANGE IN THE METHOD OF ANALYSIS 193 A. Illustrating Simultaneous-Move Games by Using Trees 193 B. Showing and Analyzing Sequential-Move Games in Strategic Form 195 4 THREE-PLAYER GAMES 199 SUMMARY 202 KEY TERMS 203 EXERCISES 203 7 Simultaneous-Move Games with Mixed Strategies I: Two-by-Two Games 1 WHAT IS A MIXED STRATEGY? 214 2 UNCERTAIN ACTIONS: MIXING MOVES TO KEEP THE OPPONENT GUESSING 215 A. The Benefit of Mixing 216 B. Equilibrium in Mixed Strategies 221 C. The Minimax Method 222 3 NASH EQUILIBRIUM AS A SYSTEM OF BELIEFS AND RESPONSES 224 4 MIXING IN NON-ZERO-SUM GAMES 226 A. Will Harry Meet Sally? Assurance, Pure Coordination, and Battle of the Sexes 226 B. Will James Meet Dean? Chicken 229 5 GENERAL DISCUSSION OF MIXED-STRATEGY EQUILIBRIA 230 A. Weak Sense of Equilibrium 230 213 B. Counterintuitive Changes in Mixture Probabilities in Zero-Sum Games 231 6 HOW TO USE MIXED STRATEGIES IN PRACTICE 233 7 EVIDENCE ON MIXING 234 A. Zero-Sum Games 234 B. Non-Zero-Sum Games 237 SUMMARY 238 KEY TERMS 239 EXERCISES 239 APPENDIX: Probability and Expected Utility 251 1 THE BASIC ALGEBRA OF PROBABILITIES 251 A. The Addition Rule 253 B. The Modified Addition Rule 254 C. The Multiplication Rule 255 D. The Modified Multiplication Rule 255 E. The Combination Rule 256 E Expected Values 257 2 ATTITUDES TOWARD RISK AND EXPECTED UTILITY 258 SUMMARY 261 KEY TERMS 261 8 Simultaneous-Move Games with Mixed Strategies II: Some General Theory 1 BEST-RESPONSE ANALYSIS 263 A. Best-Response Analysis of the Tennis Point 263 B. Best-Response Analysis in Non-Zero-Sum Games 266 2 MIXING WHEN ONE PLAYER HAS THREE OR MORE PURE STRATEGIES 268 A. A General Case 269 B. Exceptional Cases 272 C. Case of Domination by a Mixed Strategy 273 3 MIXING WHEN BOTH PLAYERS HAVE THREE STRATEGIES 276 A. Full Mixure of All Strategies 277 B. Equilibrium Mixes with Some Strategies Unused 279 4 MORE COUNTERINTUITIVE PROPERTIES OF MIXED STRATEGIES 281 A. Risky and Safe Choices in Zero-Sun Games 282 B. Counterintuitive Changes in Mixture Probabilities in Non-ZeroSum Games 284 5 MIXING AMONG ANY NUMBER OF STRATEGIES: GENERAL THEORY 285 SUMMARY 292 KEY TERMS 292 EXERCISES 292 262 PART THREE Some Broad Classes of Games and Strategies 9 Uncertainty and Information 1 IMPERFECT INFORMATION: DEALIN WITH RISK 309 A. Sharing of Risk 309 B. Paying to Reduce Risk 312 C. Manipulating Risk in Contests 313 307 2 ASYMMETRIC INFORMATION: BASIC IDEAS 315 3 DIRECT COMMUNICATION, OR "CHEAP TALK" 317 A. Perfectly Aligned Interests 318 B. Totally Conflicting Interests 319 C. Partially Aligned Interests 320 4 ADVERSE SELECTION, SIGNALING, AND SCREENING 323 A. Adverse Selection and Market Failure 323 B. Signaling in the Labor Market 326 5 EQUILIBRIA IN SIGNALING GAMES 332 A. Separating Equilibrium 334 B. Pooling Equilibrium 337 C. Semiseparating Equilibrium 339 6 EVIDENCE ABOUT SIGNALING AND SCREENING 341 SUMMARY 344 KEY TERMS 345 EXERCISES 345 APPENDIX: Inferring Probabilities from Observing Consequences 358 SUMMARY 361 KEY TERMS 361 10 Strategic Moves A. Unconditional Strategic Moves 364 B. Conditional Strategic Moves 365 362 1 A CLASSIFICATION OF STRATEGIC MOVES 363 2 CREDIBILITY OF STRATEGIC MOVES 366 3 COMMITMENTS 368 4 THREATS AND PROMISES 372 A. Example of a Threat: U.S.-Japan Trade Relations 373 B. Example of a Promise: The Restaurant Pricing Game 377 C. Example Combining Threat and Promise: Joint U.S.-China Political Action 379 5 SOME ADDITIONAL TOPICS 380 A. When Do Strategic Moves Help? 380 B. Deterrence Versus Compellence 381 6 ACQUIRING CREDIBILITY 382 A. Reducing Your Freedom of Action 382 B. Changing Your Payoffs 384 7 COUNTERING YOUR OPPONENT'S STRATEGIC MOVES 388 A. Irrationality 388 B. Cutting Off Communication 388 C. Leaving Escape Routes Open 389 D. Undermining Your Opponent's Motive to Uphold His Reputation 389 E. Salami Tactics 389 SUMMARY 390 KEY TERMS 391 EXERCISES 391 11 The Prisoners' Dilemma and Repeated Games 1 THE BASIC GAME (REVIEW) 398 2 SOLUTIONS I: REPETITION 399 A. Finite Repetition 400 B. Infinite Repetition 401 C. Games of Unknown Length 405 D. General Theory 406 3 SOLUTIONS II: PENALTIES AND REWARDS 409 4 SOLUTIONS III: LEADERSHIP 412 5 SOLUTIONS IV: ASYMMETRIC INFORMATION 414 A. General Expropriation Game 415 B. Twice-Repeated Game with Asymmetric Information 417 C. Thrice-Repeated Game 422 6 EXPERIMENTAL EVIDENCE 424 7 REAL-WORLD DILEMMAS 428 A. Evolutionary Biology 428 B. Price Matching 429 C. International Environmental Policy: The Kyoto Protocol 431 SUMMARY 434 KEY TERMS 434 EXERCISES 435 APPENDIX: Infinite Sums 442 397 12 Collective-Action Games 446 1 COLLECTIVE-ACTION GAMES WITH TWO PLAYERS 447 A. Collective Action as a Prisoners' Dilemma 448 B. Collective Action as Chicken 450 C. Collective Action as Assurance 451 D. Collective Inaction 451 2 COLLECTIVE-ACTION PROBLEMS IN LARGE GROUPS 452 3 SPILLOVERS, OR EXTERNALITIES 460 A. Commuting and Spillovers 460 B. Spillovers: The General Case 461 C. Commuting Revisited: Negative Externalities 463 D. Positive Spillovers 467 4 A BRIEF HISTORY OF IDEAS 471 A. The Classics 471 B. Modern Approaches and Solutions 472 C. Applications 478 5 "HELP!": A GAME OF CHICKEN WITH MIXED STRATEGIES 482 SUMMARY 486 KEY TERMS 487 EXERCISES 488 13 Evolutionary Games 1 THE FRAMEWORK 495 2 PRISONERS' DILEMMA 499 A. The Repeated Prisoners' Dilemma 501 B. Multiple Repetitions 505 C. Comparing the Evolutionary and Rational-Player Models 506 3 CHICKEN 508 4 THE ASSURANCE GAME 510 5 INTERACTIONS ACROSS SPECIES 513 6 THE HAWK-DOVE GAME 516 A. Rational Strategic Choice and Equilibrium 517 B. Evolutionary Stability for V > C 517 494 C. Evolutionary Stability for V< C 518 D. V< C: Stable Polymorphic Population 519 E. V< C: Each Player Mixes Strategies 519 7 THREE PHENOTYPES IN THE POPULATION 521 A. Testing for ESS 521 B. Dynamics 522 8 SOME GENERAL THEORY 525 9 PLAYING THE FIELD 528 10 EVOLUTION OF COOPERATION AND ALTRUISM 528 SUMMARY 531 KEY TERMS 532 EXERCISES 532 14 Mechanism Design 543 1 PRICE DISCRIMINATION 544 2 SOME TERMINOLOGY 549 3 COST-PLUS AND FIXED-PRICE CONTRACTS 550 A. Highway Construction: Full Information 550 B. Highway Construction: Asymmetric Information 552 4 EVIDENCE CONCERNING INFORMATION REVELATION MECHANISMS 555 5 INCENTIVES FOR EFFORT: THE SIMPLEST CASE 557 A. Managerial Supervision 557 B. Insurance Provision 561 6 INCENTIVES FOR EFFORT: EVIDENCE AND EXTENSIONS 565 A. Nonlinear Incentive Schemes 565 B. Incentives in Teams 567 C. Multiple Tasks and Outcomes 568 C. Incentives over Time 569 SUMMARY 571 KEY TERMS 571 EXERCISES 572 PART FOUR Applications to Specific Strategic Situations 15 Brinkmanship: The Cuban Missile Crisis 585 1 A BRIEF NARRATIVE OF EVENTS 586 2 A SIMPLE GAME-THEORETIC EXPLANATION 593 3 ACCOUNTING FOR ADDITIONAL COMPLEXITIES 595 4 A PROBABILISTIC THREAT 601 5 PRACTICING BRINKMANSHIP 605 SUMMARY 609 KEY TERMS 610 EXERCISES 610 16 Strategy and Voting 615 1 VOTING RULES AND PROCEDURES 616 A. Binary Methods 616 B. Plurative Methods 617 C. Mixed Methods 618 2 VOTING PARADOXES 620 A. The Condorcet Paradox 620 B. The Agenda Paradox 622 C. The Reversal Paradox 623 D. Change the Voting Method, Change the Outcome 624 3 GENERAL IDEAS PERTAINING TO PARADOXES 625 A. Black's Condition 627 B. Robustness 628 C. Intensity Ranking 628 4 STRATEGIC MANIPULATION OF VOTES 629 A. Plurality Rule 630 B. Pairwise Voting 632 C. Strategic Voting with Incomplete Information 635 5 GENERAL IDEAS PERTAINING TO MANIPULATION 638 6 THE MEDIAN VOTER THEOREM 639 A. Discrete Political Spectrum 640 B. Continuous Political Spectrum 643 SUMMARY 646 KEY TERMS 646 EXERCISES 647 17 Bidding Strategy and Auction Design 657 1 TYPES OF AUCTIONS 658 A. Auction Rules 658 B. Auction Environments 660 2 THE WINNER'S CURSE 661 3 BIDDING STRATEGIES 664 4 VICKREY'S TRUTH SERUM 665 5 ALL-PAY AUCTIONS 668 6 HOW TO SELL AT AUCTION 670 A. Risk-Neutral Bidders and Independent Estimates 671 B. Risk-Averse Bidders 672 C. Correlated Estimates 673 7 SOME ADDED TWISTS TO CONSIDER 675 A. Multiple Objects 675 B. Defeating the System 676 C. Information Disclosure 678 8 AUCTIONS ON THE INTERNET 678 9 ADDITIONAL READING ON THE THEORY AND PRACTICE OF AUCTIONS 682 SUMMARY 683 KEY TERMS 684 EXERCISES 684 18 Bargaining A. Numerical Example 694 B. General Theory 695 692 1 NASH'S COOPERATIVE SOLUTION 694 2 VARIABLE-THREAT BARGAINING 701 3 ALTERNATING-OFFERS MODEL I: TOTAL VALUE DECAYS 703 4 EXPERIMENTAL EVIDENCE 706 5 ALTERNATING-OFFERS MODEL II: IMPATIENCE 709 6 MANIPULATING INFORMATION IN BARGAINING 714 7 BARGAINING WITH MANY PARTIES AND ISSUES 717 A. Multi-Issue Bargaining 717 B. Multiparty Bargaining 719 SUMMARY 719 KEY TERMS 720 EXERCISES 720 19 Markets and Competition 724 1 A SIMPLE TRADING GAME 726 2 THE CORE 734 A. Numerical Example 736 B. Some Properties of the Core 737 C. Discussion 739 3 THE MARKET MECHANISM 741 A. Properties of the Market Mechanism 743 B. Experimental Evidence 745 4 THE SHAPLEY VALUE 746 A. Power in Legislatures and Committees 748 B. Allocation of Joint Costs 750 5 FAIR DIVISION MECHANISMS 752 SUMMARY 754 KEY TERMS 754 EXERCISES 755 Glossary Index 756 775

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