Game theory
Life is a series of encounters and interactions. As social creatures, we are involved in some form of cooperation and/or conflict at some scale every day. Game theory is a toolkit to understanding behavior in strategic situations, and the actions we should take in response. While game theory is not the final word on decision-making, it is a powerful starting point. This page contains a selection of introductory posts to important concepts in game theory. It’s intended for students and professionals that want to refine their understanding without bogging down in mathematics and notation.
“Game theory focuses directly on the most pressing issue of all: finding the right strategies and making the right decisions. … [It] is particularly effective when there are many interdependent factors, and no decision can be made in isolation from a host of other decisions.”
Adam Brandenburger, & Barry Nalebuff. (1996). Co-opetition.
Selected topics on game theory
Foundations of game theory
- Strategic interdependence, preferences, and beliefs — The building blocks of game theory
- Extensive and normal form games — The structure of strategic situations
- Common knowledge, rationality, and reasonableness in introductory game theory
Dominance, deletion, and Nash equilibrium
- Dominant strategies, dominated strategies and iterative deletion — Simplifying the game
- Nash equilibrium — A fundamental solution concept, and the hallmark of game theory
- Sequential games and subgame perfect Nash equilibrium
Classic strategic form games
- The Game of Chicken — Your stake in nerves, ‘face’ and expectations
- The Prisoner’s Dilemma — An economic, political and evolutionary bastille
- Games of conflict and coordination — The tug-of-war of economic life
Mixed strategies and equilibria
- Nash equilibrium in mixed strategies — Unpredictability in games of pure conflict
- Battle of the sexes: Mixing strategies in games of coordination and cooperation
Classic sequential games
- First mover and second mover advantage — Games of hares and tortoises
- Game of preemption and attrition — Impatience and inaction
- Commitments, threats, and promises — Tools to deter and compel
- Brinkmanship and the manipulation of shared risk
Tipping, congestion, convergence, and tragedies
- Tipping points, network effects and switching — Games amongst the collective
- Critical mass and cascades — Games in protests and revolutions
- Games of congestion — Crowding out, differentiation, and lock-in
- Tragedy of the Commons — Collective action problems
- Price competition with identical and differentiated products
- Spatial interdependence and convergence — Competition for voters
Audience
This short series on game theory is intended for two audiences: (1) undergraduate, postgraduate and high school students undertaking introductory courses in game theory; and (2) industry professionals that seek to nurture their strategic decision-making skills. Think of it as a complementary resource to your education and wider reading.
Mathematics
People say there are two types of game theorists: those in need of tools for practical application, and those in search of mathematical elegance. We are strictly in the former camp. Where possible, we avoid intensive mathematics and notation. We want to focus instead on the intuition and features of game theory. What we lose in precision, we gain in accessibility.
About us
Athenarium exists to bring notes, ideas and lessons in economics, business and decision making to a general audience. This project is another step in making topics in economics more accessible for everyone.
Further reading
- Avinash Dixit, & Barry Nalebuff. (2008). The Art of Strategy.
- Adam Brandenburger & Barry Nalebuff. (1996). Co-opetition.
- Joseph Harrington Jr. (2009). Games, Strategy, and Decision-Making.
- Robert Axelrod. (1984). The Evolution of Cooperation.
- Thomas Schelling. (1960). The Strategy of Conflict.
- Thomas Schelling. (1966). Arms and Influence.