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Game theory

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posted on 04.08.2008, 14:59 by Andrew M. Colman
Game theory models interactive decision making in terms of players, strategies, and payoffs. Conventional (individual) decision theory cannot prescribe rational choice in games, because a player cannot maximize expected utility without knowing how the coplayer(s) will act. Game theory, therefore, incorporates assumptions of common knowledge in addition to rationality. Rational players choose dominant strategies whenever possible, but many games lack such strategies. Every finite game has a Nash equilibrium, and this is the key solution concept of game theory, but the theory is indeterminate, because many games have multiple equilibria. Various criteria for equilibrium selection have been proposed. Experimental games provide information about the strategic behavior of human decision makers with bounded rationality. Evolutionary game theory helps to explain the evolution of cooperation and altruism and adaptive learning in repeated games.

History

Citation

Colman, A. M. (2005). Game theory. In B. Everitt and D. Howell (Eds), Encyclopedia of statistics in behavioral science (Vol. 2, pp. 688-694). New York: Wiley.

Published in

Colman

Publisher

Wiley

Available date

04/08/2008

Notes

A survey of key concepts of game theory

Language

en