Games and Information An Introduction to Game Theory

by Rasmusen, Eric

• ISBN13: 9781405136662
• ISBN10: 1405136669
• Edition: 4th
• Format: Hardcover
• Copyright: 2006-11-28
• Publisher: Wiley-Blackwell

Summary

Written in a crisp and approachable style, Games and Information uses simple modeling techniques and straightforward explanations to provide students with an understanding of game theory and information economics. Written for introductory courses seeking a little rigor. The 4th edition brings the material fully up-to-date and includes new end-of-chapter problems and classroom projects, as well as a math appendix. Accompanied by a comprehensive website featuring solutions to problems and teaching notes.

Author Biography

Eric Rasmusen is the Dan R. and Catherine M. Dalton Professor of Business Economics and Public Policy at Indiana University in Bloomington. In addition to Games and Information, he has edited Readings in Games and Information (Blackwell, 2001) and co-authored Measuring Judicial Independence: The Political Economy of Judging in Japan (2003).

Table of Contents

List of Figures	p. x
List of Tables	p. xiii
List of Games	p. xv
Preface	p. xviii
Contents and Purpose	p. xviii
Changes in the Second Edition, 1994	p. xviii
Changes in the Third Edition, 2001	p. xix
Changes in the Fourth Edition, 2006	p. xx
Using the Book	p. xxii
The Level of Mathematics	p. xxii
Other Books	p. xxiii
Contact Information	p. xxviii
Acknowledgements	p. xxviii
Introduction	p. 1
History	p. 1
Game Theory's Method	p. 2
Exemplifying Theory	p. 2
This Book's Style	p. 4
Notes	p. 6
Game Theory	p. 9
The Rules of the Game	p. 11
Definitions	p. 11
Dominated and Dominant Strategies: The Prisoner's Dilemma	p. 19
Iterated Dominance: The Battle of the Bismarck Sea	p. 22
Nash Equilibrium: Boxed Pigs, the Battle of the Sexes, and Ranked Coordination	p. 26
Focal Points	p. 32
Notes	p. 33
Problems	p. 36
Classroom Game: Fisheries (polished)	p. 39
Information	p. 40
The Strategic and Extensive Forms of a Game	p. 40
Information Sets	p. 45
Perfect, Certain, Symmetric, and Complete Information	p. 49
The Harsanyi Transformation and Bayesian Games	p. 52
An Example: The Png Settlement Game	p. 61
Notes	p. 64
Problems	p. 66
Classroom Game: Bayes' Rule at the Bar (in between)	p. 68
Mixed and Continuous Strategies	p. 69
Mixed Strategies: The Welfare Game	p. 69
The Payoff-equating Method and Games of Timing	p. 74
Mixed Strategies with General Parameters and N Players: The Civic Duty Game	p. 81
Randomizing Is Not Always Mixing: The Auditing Game	p. 85
Continuous Strategies: The Cournot Game	p. 87
Continuous Strategies: The Bertrand Game, Strategic Complements, and Strategic Substitutes	p. 90
Existence of Equilibrium	p. 95
Notes	p. 98
Problems	p. 103
Classroom Game: The War of Attrition (polished)	p. 107
Dynamic Games with Symmetric Information	p. 108
Subgame Perfectness	p. 108
An Example of Perfectness: Entry Deterrence I	p. 111
Credible Threats, Sunks Costs, and the Open-set Problem in the Game of Nuisance Suits	p. 113
Recoordination to Pareto-dominant Equilibria in Subgames: Pareto Perfection	p. 120
Notes	p. 122
Problems	p. 123
Classroom Game: U.S. Air for Sale (polished)	p. 126
Reputation and Repeated Games with Symmetric Information	p. 128
Finitely Repeated Games and the Chainstore Paradox	p. 128
Infinitely Repeated Games, Minimax Punishments, and the Folk Theorem	p. 130
Reputation: The One-sided Prisoner's Dilemma	p. 136
Product Quality in an Infinitely Repeated Game	p. 137
Markov Equilibria and Overlapping Generations: Customer Switching Costs	p. 141
Evolutionary Equilibrium: The Hawk-Dove Game	p. 143
Notes	p. 147
Problems	p. 151
Classroom Game: The Repeated Prisoner's Dilemma (in between)	p. 155
Dynamic Games with Incomplete Information	p. 156
Perfect Bayesian Equilibrium: Entry Deterrence II and III	p. 156
Refining Perfect Bayesian Equilibrium in the Entry Deterrence and PhD Admissions Games	p. 160
The Importance of Common Knowledge: Entry Deterrence IV and V	p. 164
Incomplete Information in the Repeated Prisoner's Dilemma: The Gang of Four Model	p. 166
The Axelrod Tournament	p. 169
Credit and the Age of the Firm: The Diamond Model	p. 170
Notes	p. 172
Problems	p. 175
Classroom Game: The Repeated Prisoner's Dilemma under Incomplete Information (improveable)	p. 177
Asymmetric Information	p. 179
Moral Hazard: Hidden Actions	p. 181
Categories of Asymmetric Information Models	p. 181
A Principal-Agent Model: The Production Game	p. 184
The Incentive Compatibility and Participation Constraints	p. 194
Optimal Contracts: The Broadway Game	p. 195
Notes	p. 201
Problems	p. 204
Classroom Game: Moral Hazard Contracts Game (improveable)	p. 210
Further Topics in Moral Hazard	p. 211
Efficiency Wages	p. 211
Tournaments	p. 214
Institutions and Agency Problems	p. 216
Renegotiation: The Repossession Game	p. 219
State-space Diagrams: Insurance Games I and II	p. 222
Joint Production by Many Agents: The Holmstrom Teams Model	p. 227
The Multitask Agency Problem	p. 230
Notes	p. 236
Problems	p. 239
Classroom Game: Lobbying Teams (polished)	p. 242
Adverse Selection	p. 243
Introduction: Production Game VI	p. 243
Adverse Selection under Certainty: Lemons I and II	p. 249
Heterogeneous Tastes: Lemons Il and IV	p. 252
Adverse Selection under Uncertainty: Insurance Game III	p. 255
Market Microstructure	p. 259
A Variety of Applications	p. 263
Adverse Selection and Moral Hazard Combined: Production Game VII	p. 266
Notes	p. 269
Problems	p. 272
Classroom Game: Adverse Selection in Stock Sales (improveable)	p. 275
Mechanism Design and Postcontractual Hidden Knowledge	p. 276
Mechanisms, Unravelling, Cross Checking, and the Revelation Principle	p. 276
Myerson Mechanism Design	p. 287
An Example of Postcontractual Hidden Knowledge: The Salesman Game	p. 289
The Groves Mechanism	p. 293
Price Discrimination	p. 296
Rate-of-return Regulation and Government Procurement	p. 304
Notes	p. 314
Problems	p. 316
Classroom Game: Regulatory Ratcheting (improveable)	p. 319
Signaling	p. 320
The Informed Player Moves First: Signalling	p. 320
Variants on the Signalling Model of Education	p. 324
General Comments on Signalling in Education	p. 329
The Informed Player Moves Second: Screening	p. 330
Two Signals: The Game of Underpricing New Stock Issues	p. 338
Signal Jamming and Limit Pricing	p. 341
Countersignalling	p. 345
Notes	p. 348
Problems	p. 349
Classroom Game: Signalling Marriageability (improveable)	p. 353
Applications	p. 355
Bargaining	p. 357
The Basic Bargaining Problem: Splitting a Pie	p. 357
The Nash Bargaining Solution	p. 359
Alternating Offers over Finite Time	p. 361
Alternating Offers over Infinite Time	p. 362
Incomplete Information	p. 365
Setting Up a Way to Bargain: the Myerson-Satterthwaite Model	p. 369
Notes	p. 380
Problems	p. 381
Classroom Game: Labor Bargaining (polished)	p. 384
Auctions	p. 385
Values Private and Common, Continuous and Discrete	p. 385
Optimal Strategies under Different Rules in Private-value Auctions	p. 390
Revenue Equivalence, Risk Aversion, and Uncertainty	p. 403
Reserve Prices and the Marginal Revenue Approach	p. 409
Common-value Auctions and the Winner's Curse	p. 414
Asymmetric Equilibria, Affiliation, and Linkage: The Wallet Game	p. 423
Notes	p. 428
Problems	p. 430
Classroom Game: Auctions (polished)	p. 432
Pricing	p. 433
Quantities as Strategies: Cournot Equilibrium Revisited	p. 433
Capacity Constraints: The Edgeworth Paradox	p. 436
Location Models	p. 441
Comparative Statics and Supermodular Games	p. 449
Vertical Differentiation	p. 454
Durable Monopoly	p. 461
Notes	p. 467
Problems	p. 469
Classroom Game: The Kleit Oligopoly Game (polished)	p. 472
Mathematical Appendix	p. 473
Notation	p. 473
The Greek Alphabet	p. 475
Glossary	p. 475
Formulas and Functions	p. 479
Probability Distributions	p. 480
Supermodularity	p. 482
Fixed Point Theorems	p. 484
Genericity	p. 485
Discounting	p. 486
Risk	p. 487
References and Name Index	p. 493
Subject Index	p. 521
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