A History of Game Theory - Vol. 1

By Mary Ann Dimand; Robert W. Dimand | Go to book overview

2

STRATEGIC INTERDEPENDENCE
Cournot and Duopoly Cournot’s (1838) treatments of monopoly, duopoly, and bilateral monopoly were almost incredibly early and prescient
1 in their mathematization of economic problems;
2 in their use of graphical illustrations; and
3 in their treatment of fundamentally game-theoretic problems of strategic interdependence of optimizing agents.

Recognition of Cournot’s eminence has become almost axiomatic to economists. One of the most familiar treatments of duopoly and the most-frequently employed equilibrium concept in game theory have been named after him: Cournot duopoly and Cournot—Nash equilibrium. Before Cournot (1838), writers on strategic interdependence such as Sun Tzu, Pascal and Waldegrave had formulated problems in the fields of war, ethics or card games. It was Cournot who first gave a rigorous analysis of market structure, and he gave it from a game-theoretic perspective.

That Cournot’s massive contribution went unrecognized for a remarkably long period is commonplace to economists. 1 It was long widely thought that Bertrand (1883) was the first thinker to recognize Cournot’s work. Although Dimand (1988) has shown that Cherriman (1857, reprinted in Dimand 1995) reviewed Cournot intelligently, work stemming from Cournot’s did not blossom until after Bertrand, and that was based, curiously enough, on a misunderstanding of Bertrand (see Magnan de Bornier (1992) for a discussion of what Bertrand actually said).

Considering the economics of monopoly and equilibrium analysis, Schumpeter said that

The chief performance was Cournot’s and the period’s work may be described as a series of successful attempts to develop his statics of straight monopoly and as another series of much less successful attempts to develop and to correct his theories of oligopoly and bilateral monopoly. Second honors are divided between Marshall and Edgeworth.

(Schumpeter 1954, 976)

-18-

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A History of Game Theory - Vol. 1
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • 1 - Introduction 1
  • 2 - Strategic Interdependence 18
  • 3 - Strategic Interdependence 35
  • 4 - Strategic Interdependence 54
  • 5 - Lewis Carroll and the Game of Politics 84
  • 6 - Early Mathematical Models of Conflict 104
  • 7 - The Minimax Approach to Non-Cooperative Strategic Games from Waldegrave to Borel 120
  • 8 - From Games of Pure Chance to Strategic Games 131
  • 9 142
  • Notes 158
  • Bibliography 170
  • Index 184
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