Strategies and Games

Theory and Practice

by Dutta

ISBN: 9780262332477 | Copyright 1999

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Game theory has become increasingly popular among undergraduate as well as business school students. This text is the first to provide both a complete theoretical treatment of the subject and a variety of real-world applications, primarily in economics, but also in business, political science, and the law. Strategies and Games grew out of Prajit Dutta's experience teaching a course in game theory over the last six years at Columbia University.The book is divided into three parts: Strategic Form Games and Their Applications, Extensive Form Games and Their Applications, and Asymmetric Information Games and Their Applications. The theoretical topics include dominance solutions, Nash equilibrium, backward induction, subgame perfect equilibrium, repeated games, dynamic games, Bayes-Nash equilibrium, mechanism design, auction theory, and signaling. An appendix presents a thorough discussion of single-agent decision theory, as well as the optimization and probability theory required for the course.Every chapter that introduces a new theoretical concept opens with examples and ends with a case study. Case studies include Global Warming and the Internet, Poison Pills, Treasury Bill Auctions, and Final Jeopardy. Each part of the book also contains several chapter-length applications including Bankruptcy Law, the NASDAQ market, OPEC, and the Commons problem. This is also the first text to provide a detailed analysis of dynamic strategic interaction.

There is a profusion of game theory texts now available. Prajit Dutta's book is clearly one of the best. It will be of particular interest to undergraduates with a background in economics, who seek a deeper understanding of how strategy plays a role in competition, particularly dynamic competition.

Eric Maskin Department of Economics, Harvard University

Professor Dutta strikes an excellent balance between formal development of the fundamental ideas in game theory and interesting economic applications. This book introduces advanced undergraduates and beginning graduate students to the exciting and elegant world of game theory.

Thomas A. Gresik Department of Economics, The Pennsylvania State University
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Brief Contents/Contents (pg. vii)
Preface (pg. xxi)
A Reader's Guide (pg. xxix)
Part 1: Introduction (pg. 1)
A First Look at The Applications (pg. 3)
A First at the Theory (pg. 17)
Part Two: Strategic Form Games: Theory and Practice (pg. 33)
Strategic Form Games and (pg. 35)
Dominance Solvability (pg. 49)
Nash Equilibrium (pg. 63)
An Application: Cournot Duopoly (pg. 75)
An Application: The Commons Problem (pg. 91)
Mixed Strategies (pg. 103)
Two Applications: Natural Monopoly and Bankruptcy Law (pg. 121)
Zero-Sum Games (pg. 139)
Part Three: Extensive Form Games: Theory and Applications (pg. 155)
Extensive Form Games and Backward Induction (pg. 157)
An Application: Research and Development (pg. 179)
Subgame Perfect Equilibrium (pg. 193)
Finitely Repeated Games (pg. 209)
Infinitely Repeated Games (pg. 227)
An Application: Competition and Collusion in the NASDAQ Stock Market (pg. 243)
An Application: OPEC (pg. 257)
Dynamic Games with an Application to the Commons Problem (pg. 275)
Part Four: Asymmetric Information Games: Theory and Applications (pg. 291)
Moral Hazard and Incentives Theory (pg. 293)
Games with Incomplete Information (pg. 309)
An Application: Incomplete Information in a Cournot Duopoly (pg. 331)
Mechanism Design, the Revelation Principle, and Sales to an Unknown Buyer (pg. 349)
An Application: Auctions (pg. 367)
Signaling Games and the Lemons Problem (pg. 383)
Part Five: Foundations (pg. 401)
Calculus and Optimization (pg. 403)
Probability and Expectation (pg. 421)
Utility and Expected Utility (pg. 433)
Existence of Nash Equilibria (pg. 451)
Index (pg. 465)

Prajit K. Dutta

Prajit K. Dutta


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