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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

What is a solution concept?

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.