Circuit Negma

C++, C, VB.NET, PCB, Electronics, Circuit Design

Game Theory

Posted by Circuit Negma on May 7, 2006

{MIT :: Sloan-School-of-Management/15-040Spring2004/ Lecture 1, By: Prof. David McAdams

What is Game Theory:

    It is the study of rational behavior in situations in which your choices affect others and depends on others’ choices. 

Key Elements of every Game: 

1. Players: Who is interacting or participating in the game?

2. Strategies: What are their options?

3. Payoffs: What are their incentives?

4. Information: What do they know?

5.Rationality: How do they think? — I believe that rationality could be minimized to eliminated in the game by previous inside information of the opponents. 


How to anticipate others’ behavior in a game:

1. Evolution: If non-strategic and adaptive, play repeatedly (or observe past play)

2. Dominance: If never play a strategy that is always worse than another

3. Rationalizability: If play optimal given some beliefs about what others play (and what others believe)

4. Equilibrium: If play optimal given correct beliefs about others


Themes for acquiring advantage in games:

1. Commitment / strategic moves: Credibility, threats, and promises

2. Leveraging limited rationality: Reputation and surprise

3. Exploiting incomplete information: Signaling, selection, and info cascades


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