Games, strategies, and decision making

587 Pages·2009·4.236 MB·English

by  Joseph E. Harrington

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Games, Strategies, and
Decision Making
Joseph E. Harrington, Jr.
Johns Hopkins University
Worth Publishers
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Dennis Free, Aptara®, Inc.
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Composition: Aptara®, Inc.
Printing and Binding: RR Donnelley
Library of Congress Control Number: 2008925817
ISBN-13: 978-0-7167-6630-8
ISBN-10: 0-7167-6630-2
© 2009 by Worth Publishers
All rights reserved
Printed in the United States of America
First printing
Worth Publishers
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Games, Strategies, and
Decision Making
To Colleen and Grace,
who as children taught me love,
and who as teenagers taught me strategy.
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Joseph E. Harrington, Jr., is Professor of Economics at Johns Hopkins
University. He has served on various editorial boards, including those of the
RAND Journal of Economics,Foundations and Trends in Microeconomics, and
theSouthern Economic Journal. His research has appeared in top journals in
a variety of disciplines, including economics (e.g., the American Economic
Review,Journal of Political Economy, and Games and Economic Behavior), po-
litical science (Economics and Politics, Public Choice), sociology (American
Journal of Sociology), management science (Management Science), and psy-
chology (Journal of Mathematical Psychology). He is a coauthor of Economics
of Regulation and Antitrust,which is in its fourth edition.
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Brief Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xv
CHAPTER 1
Introduction to Strategic Reasoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
CHAPTER 2
Building a Model of a Strategic Situation . . . . . . . . . . . . . . . . . . .17
CHAPTER 3
Eliminating the Impossible: Solving a Game when
Rationality Is Common Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
CHAPTER 4
Stable Play: Nash Equilibria in Discrete Games
with Two or Three Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
CHAPTER 5
Stable Play: Nash Equilibria in Discrete
n-Player Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117
CHAPTER 6
Stable Play: Nash Equilibria in Continuous Games . . .147
CHAPTER 7
Keep ’Em Guessing: Randomized Strategies . . . . . . . . . . . . . .181
CHAPTER 8
Taking Turns: Sequential Games with
Perfect Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .219
CHAPTER 9
Taking Turns in the Dark: Sequential Games with
Imperfect Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .255
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CHAPTER 10
I Know Something You Don’t Know:
Games with Private Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .291
CHAPTER 11
What You Do Tells Me Who You Are:
Signaling Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .325
CHAPTER 12
Lies and the Lying Liars That Tell Them:
Cheap Talk Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359
CHAPTER 13
Playing Forever: Repeated Interaction
with Infinitely Lived Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .391
CHAPTER 14
Cooperation and Reputation: Applications of Repeated
Interaction with Infinitely Lived Players . . . . . . . . . . . . . . . . . . . .423
CHAPTER 15
Interaction in Infinitely Lived Institutions . . . . . . . . . . . . . . . . .451
CHAPTER 16
Evolutionary Game Theory and Biology:
Evolutionarily Stable Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .479
CHAPTER 17
Evolutionary Game Theory and Biology:
Replicator Dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .507
Answers to “Check Your Understanding” Questions . . . . . . . . . . . . . . . . . . . . . .S-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .G-1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I-1
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