Flashcards in 00 - Introduction Deck (10)

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1

## What is game theory?

###
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

2

## Which two components make a game-theoretic model?

###
1) the game -> formally describes the interactive decision problem

2) the solution concept -> predicts (or normatively prescribes) behavior and outcome of the game

3

## What is the objective of game theory?

### understand individual and social behavior, predict social phenomena

4

## What is non-cooperative or Strategic Game Theory?

### Possible actions of individual players are the primitives

5

## What is cooperative or coalitional Game theory?

### Possible joint actions of groups of players are the primitives

6

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

###
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)

7

## What does a game need to specify?

###
- who interacts (the players)

- the rules of the interaction

- the information that agents have at any point

but NOT how players behave!

8

## What are static games?

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

9

## What are dynamic games?

###
some players move after observing prior moves ->

Extensive form

10