Game Theory: A Critical Introduction

By Shaun P. Hargreaves Heap; Yanis Varoufakis | Go to book overview

2

THE ELEMENTS OF GAME THEORY

2.1INTRODUCTION

This chapter introduces the central ideas in game theory. It begins by showing how rational players can logically weed out strategies which are strategically inferior (sections 2.3 and 2.4). Such elimination of strategies relies on what game theory refers to as dominance reasoning and it sometimes requires the assumption of common knowledge of rationality (CKR). It is important because it yields clear predictions of what instrumentally rational players will do in some games by means of a step-by-step logic. However, in many games dominance reasoning offers no clear (or useful) predictions of what might happen. In these circumstances, game theorists commonly turn to the Nash equilibrium solution concept, named after its creator John Nash (section 2.5). The basic idea behind this concept is that rational players should not want to change their strategies if they knew what each of them had chosen to do.

This solution concept helps to refine the predictions of game theory. However, there is a cost in terms of generality. The step to Nash seems to require rather more than the assumptions of rationality and CKR. In section 1.2.2 of the previous chapter we described the essence of the extra requirement: the assumption that players’ beliefs will be consistently aligned (CAB). In some games even this move does not generate predictions adequately because there are some games in which no specific set of strategies is recommended by the Nash equilibrium. In the jargon, there are games in which there is either no Nash equilibrium in pure strategies, or there are many. 1 Thus predictions made using the Nash equilibrium concept can be either non-existent or indeterminate.

As a result game theorists have attempted to refine the Nash equilibrium concept. We present two such refinements: the Bayesian Nash equilibrium concept for games of incomplete information (section 2.6) and the idea of trembling hand perfect equilibria (section 2.7). They embody two of the central ideas which have been at play in the project of refining the Nash equilibrium to overcome the problems it encounters in many games.

-41-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Game Theory: A Critical Introduction
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • List of Boxes viii
  • Preface xi
  • 1 - An Overview 1
  • 2 - The Elements of Game Theory 41
  • 3 - Dynamic Games 80
  • 4 - Bargaining Games 111
  • 5 - The Prisoners’ Dilemma 146
  • 6 - Repeated Games and Reputations 167
  • 7 - Evolutionary Games 195
  • 8 - Watching People Play Games 236
  • Postscript 260
  • Notes 261
  • Bibliography 265
  • Name Index 273
  • Subject Index 276
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 282

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.