Game Theory : A Non-Technical Introduction to the Analysis of Strategy

by McCain, Roger A.

• ISBN13: 9780324175721
• ISBN10: 0324175728
• Edition: 1st
• Format: Paperback
• Copyright: 2003-09-17
• Publisher: South-Western College Pub

Summary

The objective of this text is to teach game theoretic principles by example in order to convey the concepts in a non-technical way. Game theoretic principles are the same across a wide field of applications, yet students typically find examples in their own fields easier to relate to. This book focuses on providing a true interdisciplinary perspective that draws upon applications from many different areas of study such as management, strategic planning, competitive intelligence, military operations, economics, political science, finance, etc.

Table of Contents

Preface xiii
Part 1 FUNDAMENTALS	1	(30)
Chapter 1 Conflict, Strategy, and Games	2	(14)
The Spanish Rebellion: Puffin' the Hurt on Hirtuleius	2	(3)
Game Theory Emerges	5	(2)
A Closer Look: John vonNeumann	5	(1)
A Closer Look: Oskar Morgenstern	6	(1)
Game Theory, Neoclassical Economics, and Mathematics	6	(1)
What Does This Have to Do with Games?	7	(2)
A Closer Look: Albert Tucker	9	(1)
The Prisoner's Dilemma	9	(2)
Games in Normal and Extensive Form	11	(1)
John Nash's Problem in the Movie	12	(1)
A Scientific Metaphor	13	(1)
A Business Case	13	(1)
Summary	14	(1)
Exercises and Discussion Questions	15	(1)
Chapter 2 Games in Extensive and Normal Form	16	(15)
Representation in Normal Form: A Business Case	16	(4)
Examining the Normal Form	20	(5)
The Spanish Rebellion	21	(1)
The Dictator Game	21	(4)
The Prisoner's Dilemma in Extensive Form	25	(1)
An Example from Military History	26	(1)
Summary	27	(1)
Exercises and Discussion Questions	28	(3)
Part 2 NONCOOPERATIVE EQUILIBRIA IN NORMAL FORM GAMES	31	(148)
Chapter 3 Dominant Strategies and Social Dilemmas	32	(13)
The Dumping Game	32	(2)
Dominant Strategies	34	(1)
Social Dilemmas and Cooperative Solutions	35	(1)
Collaborative Product Development	36	(1)
A Closer Look: George Stigler	37	(1)
Cooperative and Noncooperative Games Yet Again	37	(1)
A Political Game	38	(2)
Games with More than Two Strategies	40	(1)
A Textbook-Writing Game	41	(1)
Summary	42	(1)
Exercises and Discussion Questions	42	(3)
Chapter 4 Nash Equilibrium	45	(15)
A Textbook-Writing Game, Continued	45	(2)
A Closer Look: John Forbes Nash	45	(2)
Nash Equilibrium	47	(1)
Location, Location, Location	48	(2)
Heuristic Methods of Finding Nash Equilibria	50	(1)
Choosing Radio Formats	51	(2)
The Heave-Ho Game	53	(1)
A Closer Look: Thomas C. Schelling	53	(1)
A Closer Look: The Basis of a Schelling Point	54	(1)
Market Day	54	(1)
That Movie, Again	55	(1)
A Closer Look: Refinements of Nash Equilibrium	56	(1)
An Escape-Evasion Game	56	(1)
Summary	57	(1)
Exercises and Discussion Questions	58	(2)
Chapter 5 Some Classical Cases in Game Theory	60	(11)
A Quiz Game	60	(3)
A Closer Look: Augustin Cournot	63	(1)
The Maximin Solution	63	(2)
A Closer Look: Constant Numbers	64	(1)
The Significance of Zero-Sum Games	65	(1)
The Battle of the Sexes	66	(1)
Chicken	67	(1)
Hawk vs. Dove	67	(1)
Expressing Payoffs in Ordinal Numbers	68	(2)
Summary	70	(1)
Exercises and Discussion Questions	70	(1)
Chapter 6 Three-Person Games	71	(14)
An International Alliance	71	(3)
A Closer Look	73	(1)
A "Spoiler" in a Political Game	74	(1)
A Closer Look: John Maynard Keynes	75	(1)
Stock Advising	75	(1)
A Crowding Game	76	(2)
A Closer Look	78	(1)
A Public Goods Contribution Game	78	(2)
Summary	80	(1)
Exercises and Discussion Questions	81	(4)
Chapter 7 Probability and Game Theory	85	(16)
Probability	85	(2)
Expected Value	87	(1)
A Closer Look: Fortuna	88	(1)
Nature as a Player	88	(1)
An Example from Naval Conflict	89	(2)
Risk Aversion	91	(2)
Expected Utility	93	(3)
Summary	96	(1)
Appendix A: Measuring Utility	97	(1)
A Closer Look: Reverend Thomas Bayes	98	(1)
Appendix B: Bayes Rule	98	(1)
A Closer Look: John Harsanyi	99	(1)
Exercises and Discussion Questions	99	(2)
Chapter 8 Mixed Strategy Nash Equilibria	101	(15)
Keeping Them Honest in Baseball	101	(4)
A Closer Look: Thinking It Through	104	(1)
Pure and Mixed Strategies	105	(1)
A Blue-Light Special	106	(1)
Equilibria with Mixed and Pure Strategies	107	(2)
Graphics for Mixed Strategies	109	(3)
Summary	112	(1)
Exercises and Discussion Questions	113	(3)
Chapter 9 Advanced Topics in Noncooperative Equilibrium	116	(15)
The Location Game, Again	116	(3)
Iterated Elimination of Dominated Strategies	119	(2)
Refinement: A Trembling Hand	121	(1)
A Confession Game	122	(2)
A Symmetrical Noncooperative Solution to the Blonde Problem	124	(2)
The Nathan Detroit Dilemma	126	(3)
Summary	129	(1)
Exercises and Discussion Questions	129	(2)
Chapter 10 Duopoly Strategies and Prices	131	(27)
Cournot Models	131	(4)
Nash Equilibrium in Cournot Models	135	(2)
Bertrand and Edgeworth	137	(2)
A Mixed Strategy Pricing Game	139	(4)
Applicability	143	(1)
Summary	144	(1)
Appendix A: A Mathematical Treatment of the Cournot Model	144	(4)
Appendix B: A Calculus-Based Mixed Strategy Pricing Model and Business Case	148	(1)
The Large Turbine Generator Industry	149	(7)
Assumptions about Cost	150	(4)
The Math	154	(2)
Exercises and Discussion Questions	156	(2)
Chapter 11 N-Person Games	158	(21)
The Queuing Game	158	(2)
Simplifying Assumptions for N-Person Games	160	(2)
Games with Many Participants: Proportional Games	162	(3)
Hawk vs. Dove, Revisited	165	(2)
Supply, Demand, and Tattonement	167	(3)
Keynesian Economics and Coordination Problems	170	(2)
Pros and Cons of the Simplifying Assumptions	172	(1)
Summary	173	(1)
Exercises and Discussion Questions	174	(5)
Part 3 COOPERATIVE SOLUTIONS	179	(32)
Chapter 12 Elements of Cooperative Games	180	(21)
Buy My Bike?	180	(3)
Credible Commitment	183	(1)
A Real Estate Development	184	(3)
A Closer Look	187	(1)
Solution Set	187	(1)
A Closer Look	188	(1)
The Core	188	(1)
Carpool	189	(3)
Some Political Coalitions	192	(3)
Another Look at the International Alliance Game	195	(1)
Summary	196	(1)
Exercises and Discussion Questions	197	(4)
Chapter 13 Applications of the Core to Economics	201	(10)
The Market Game	201	(1)
The Core of a Two-Person Exchange Game	202	(3)
The Core with More than Two Pairs of Traders	205	(4)
A Closer Look: Cooperation and Competition	209	(1)
The Core of a Public Goods Contribution Game	209	(2)
Monopoly and Regulation	211	(4)
Summary	215	(1)
Exercises and Discussion Questions	216
Part 4 SEQUENTIAL GAMES	211	(74)
Chapter 14 Sequential Games	218	(19)
Strategic Investment to Deter Entry	218	(3)
Concepts for Sequential Games	221	(2)
The Spanish Rebellion, Again	223	(2)
Nash and Subgame Perfect Equilibrium	225	(1)
The Centipede Game	226	(1)
Going Coconutty	227	(3)
A Closer Look: The Austrian School	228	(2)
Counterattack	230	(1)
Summary	231	(1)
Exercises and Discussion Questions	232	(5)
Chapter 15 Imbedded Games	237	(18)
Planning Doctoral Study	237	(3)
A Closer Look: Nested and Imbedded Games	240	(1)
The Maltese Falcon	240	(3)
The Centipede Solved	243	(2)
Counterattack Revisited	245	(1)
Why Are There Strikes?	245	(4)
Summary	249	(1)
Exercises and Discussion Questions	250	(5)
Chapter 16 Repeated Play	255	(15)
The Campers' Dilemma	255	(3)
Pressing the Shirts	258	(5)
A Closer Look: Reinhard Selten	262	(1)
The Chain Store Paradox	263	(1)
Terrorism	263	(4)
A Closer Look	266	(1)
Summary	267	(1)
Exercises and Discussion Questions	267	(3)
Chapter 17 Indefinitely Repeated Play	270	(15)
A Repeated Effort Dilemma	270	(3)
The Discount Factor	273	(1)
A Closer Look	274	(1)
The Campers' Dilemma Solved	274	(3)
Poison Gas	277	(2)
A Closer Look	279	(1)
Collusive Pricing	279	(2)
Errors	281	(1)
Summary	282	(1)
Exercises and Discussion Questions	282	(3)
Part 5 SELECTED APPLICATIONS	285	(86)
Chapter 18 Game Theory, Law, and Social Mechanism Design	286	(15)
Liability	287	(3)
Grading Team Projects	290	(3)
A Closer Look	293	(1)
The Paradox of Benevolent Authority	293	(3)
Application: Monetary Authority	296	(1)
Summary	297	(1)
Exercises and Discussion Questions	298	(3)
Chapter 19 Voting Games	301	(19)
Party! Party! Party!	301	(3)
The Theme for the Party	304	(1)
Strategic Voting	305	(1)
Voting Problems and Criteria	306	(2)
A Closer Look: The Marquis De Condorcet	307	(1)
A Closer Look: Kenneth Arrow	307	(1)
Alternative Voting Schemes	308	(2)
A Closer Look: The Enlightenment	309	(1)
A Closer Look: De Borda and the Borda Count	309	(1)
Case: The Finnish Presidential Election	310	(2)
Case: An American Presidential Election	312	(2)
Case: The American Presidential Election of 2000	314	(3)
Summary	317	(1)
Exercises and Discussion Questions	317	(3)
Chapter 20 Games and Experiments	320	(16)
A Prisoner's Dilemma Experiment	320	(2)
Prisoner's Dilemma Results	322	(2)
A Mixed Experiment	324	(2)
Ultimatum Games	326	(1)
Centipede Games and Reciprocity	327	(2)
Work to Be Done (Framing)	329	(1)
Where We Have Arrived	330	(1)
Business Application: Reciprocity in the Employment Relationship	331	(2)
Summary	333	(1)
Exercises and Discussion Questions	333	(3)
Chapter 21 Auctions	336	(18)
A Camera Auction	336	(3)
Efficiency	339	(1)
A Closer Look	340	(1)
The eBay Example	340	(5)
Auctions: Kinds and Frames	345	(2)
A Closer Look: William S. Vickery	346	(1)
The Winner's Curse	347	(1)
An Auction for Two Complementary Items	348	(2)
Choosing Auction Forms	350	(1)
Some Experimental Findings: Individual Private Values	351	(1)
Pure Common Values	351	(1)
Summary	352	(1)
Exercises and Discussion Questions	352	(2)
Chapter 22 Evolution and Boundedly Rational Learning	354	(17)
Hawk vs. Dove	354	(3)
A Closer Look: John Maynard Smith	356	(1)
A Sewage Game	357	(2)
Bounded Rationality	359	(1)
A Closer Look: Herbert Simon	360	(1)
Informationally (Almost) Efficient Markets	360	(4)
Evolution and a Repeated Social Dilemma	364	(1)
Tit-for-Tat, Reciprocity, and the Evolution of the Human Species	365	(3)
A Closer Look: Robert Axelrod and the Axelrod Tournament	366	(2)
Summary	368	(1)
Exercises and Discussion Questions	368	(3)
Glossary	371	(12)
Index	383