00 - Introduction

Question 1

What is game theory?

Answer 1

mathematical methodology to rigorously model and analyze interactive decision making between:
two or more agents, where the outcome for one agent depends on actions taken by others

Question 2

Which two components make a game-theoretic model?

Answer 2

1) the game -> formally describes the interactive decision problem
2) the solution concept -> predicts (or normatively prescribes) behavior and outcome of the game

Question 3

What is the objective of game theory?

Answer 3

understand individual and social behavior, predict social phenomena

Question 4

What is non-cooperative or Strategic Game Theory?

Answer 4

Possible actions of individual players are the primitives

Question 5

What is cooperative or coalitional Game theory?

Answer 5

Possible joint actions of groups of players are the primitives

Question 6

What are the standard assumptions for non-cooperative game theory?

Answer 6

1) rationality (players behave according to well-defined objectives and maximize their own expected utility)
2) strategic reasoning (players use their knowledge of the situation to form “reasonable” expectations of others’ behavior)

Question 7

What does a game need to specify?

Answer 7

• who interacts (the players)
• the rules of the interaction
• the information that agents have at any point
  but NOT how players behave!

Question 8

What are static games?

Answer 8

all players move once and ”simultaneously” -> Normal/strategic form

Question 9

What are dynamic games?

Answer 9

some players move after observing prior moves ->

Extensive form

Question 10

What is a solution concept?

Answer 10

a solution concept is a formal rule for predicting how a game will be played. These predictions are called “solutions”, and describe which strategies will be adopted by players and, therefore, the result of the game.