Playing for Real: The Ultimate Guide to Game Theory and Its Applications
Playing for Real: A Text on Game Theory by Ken Binmore
Game theory is the study of strategic interaction among rational agents. It can be used to analyze situations where the choices of one person affect the outcomes of others, such as in business, politics, economics, or social sciences. Game theory can help us understand how people behave in strategic situations, what are the best strategies to adopt, and what are the possible outcomes of different scenarios.
Playing for real binmore pdf merge
Playing for Real is a comprehensive textbook on game theory written by Ken Binmore, a renowned game theorist and professor emeritus at University College London. The book provides an introduction to game theory that seeks to answer three questions: what is game theory about? How do I apply game theory? Why is game theory right? The book covers a wide range of topics in game theory, from basic concepts to advanced applications. The book also includes many examples, exercises, solutions, and illustrations to help readers learn and practice game theory.
What are the main topics covered in Playing for Real?
Playing for Real covers 21 chapters that span the following main topics:
Utility theory and decision making
This topic introduces the concept of utility, which is a measure of how much a person values different outcomes. Utility theory helps us model how people make decisions under uncertainty, risk, or ambiguity. It also helps us compare different preferences and choices among different people.
Strategic games and Nash equilibrium
This topic introduces the concept of strategic games, which are situations where two or more players choose actions simultaneously or without knowing each other's choices. Strategic games can be represented by normal form or matrix form. The main solution concept for strategic games is Nash equilibrium, which is a set of actions where no player can benefit by deviating unilaterally. Nash equilibrium captures the idea of mutual best response among rational players.
Extensive games and backward induction
This topic introduces the concept of extensive games, which are situations where players choose actions sequentially or with some knowledge of previous choices. Extensive games can be represented by game trees or extensive form. The main solution concept for extensive games is backward induction, which is a method of finding Nash equilibrium by starting from the end of the game and working backwards. Backward induction captures the idea of forward-looking reasoning among rational players.
Mixed strategies and minimax theory
This topic introduces the concept of mixed strategies, which are situations where players choose actions randomly according to some probabilities. Mixed strategies can be used to model situations where players are indifferent among pure strategies or where players want to randomize their actions to avoid being predictable. The main solution concept for mixed strategies is minimax theory, which is a method of finding Nash equilibrium by minimizing the maximum possible loss or maximizing the minimum possible gain. Minimax theory captures the idea of worst-case scenario analysis among rational players.
Imperfect competition and market power
This topic introduces the concept of imperfect competition, which is a situation where there are few sellers or buyers in a market, and they have some influence over the price or quantity of a good or service. Imperfect competition can lead to market power, which is the ability of a seller or buyer to affect the market price or quantity. The main models of imperfect competition are monopoly, oligopoly, monopolistic competition, and duopoly. The main solution concepts for imperfect competition are Cournot equilibrium, Bertrand equilibrium, Stackelberg equilibrium, and kinked demand curve.
Repeated games and cooperation
This topic introduces the concept of repeated games, which are situations where players play the same game multiple times or indefinitely. Repeated games can be used to model situations where players have long-term relationships or interactions. The main solution concept for repeated games is subgame perfect equilibrium, which is a refinement of Nash equilibrium that eliminates non-credible threats or promises. Repeated games can also allow for cooperation, which is a situation where players coordinate their actions to achieve a better outcome than Nash equilibrium. The main models of cooperation are prisoner's dilemma, tit-for-tat strategy, trigger strategy, and folk theorem.
Bayesian games and incomplete information
This topic introduces the concept of Bayesian games, which are situations where players have incomplete information about some aspects of the game, such as the payoffs, the actions, or the types of other players. Bayesian games can be used to model situations where players have private information or beliefs that affect their choices. The main solution concept for Bayesian games is Bayesian Nash equilibrium, which is a generalization of Nash equilibrium that incorporates the beliefs and expectations of players. The main models of incomplete information are signaling games, screening games, cheap talk games, and auctions.
Refinements of Nash equilibrium and rationality
This topic introduces the concept of refinements of Nash equilibrium, which are criteria that eliminate some Nash equilibria that are implausible, unreasonable, or inconsistent with rational behavior. Refinements of Nash equilibrium can be used to model situations where players have higher-order beliefs or common knowledge about each other's rationality. The main refinements of Nash equilibrium are dominant strategy equilibrium, iterated dominance equilibrium, rationalizability, trembling hand perfect equilibrium, proper equilibrium, and perfect Bayesian equilibrium.
Bargaining theory and fair division
This topic introduces the concept of bargaining theory, which is the study of how two or more players reach an agreement or a compromise over some issues or resources. Bargaining theory can be used to model situations where players have conflicting interests but also some mutual benefit from cooperation. The main solution concepts for bargaining theory are Nash bargaining solution, Kalai-Smorodinsky solution, Rubinstein bargaining model, and Shapley value. Bargaining theory can also help us analyze fair division problems, which are situations where players want to divide some resources fairly according to some criteria.
Coalition formation and cooperative games
This topic introduces the concept of coalition formation, which is the study of how groups of players form and act together in a game. Coalition formation can be used to model situations where players have collective interests or externalities that affect their payoffs. The main solution concepts for coalition formation are core, stable set, Shapley value, nucleolus, and bargaining set. Coalition formation can also help us analyze cooperative games, which are situations where players can make binding agreements or contracts that enforce their strategies.
Mechanism design and social choice
This topic introduces the concept of mechanism design, which is the study of how to design rules or institutions that induce desired outcomes or behaviors in a game. Mechanism design can be used to model situations where there is a designer or a planner who wants to achieve some social goals or objectives. The main solution concepts for mechanism design are incentive compatibility, revelation principle, implementation theory, and Vickrey-Clarke-Groves mechanism. Mechanism design can also help us analyze social choice problems, which are situations where there is a collective decision making process that aggregates the preferences or votes of individuals.
Auction theory and bidding strategies
(every highest bidder pays their bid). The main solution concepts for auction theory are optimal bidding strategy, revenue equivalence theorem, winner's curse, and reserve price.
How to access Playing for Real online?
Playing for Real is available online as a PDF file from the Oxford Academic website. You can download the PDF file for free if you have access to an academic institution or a library that subscribes to Oxford Academic. You can also purchase the PDF file for a fee from the Oxford University Press website. Alternatively, you can buy the hardcover or paperback version of the book from various online or offline bookstores.
Playing for Real is a comprehensive and engaging textbook on game theory that covers a wide range of topics and applications. The book is suitable for undergraduate or graduate students who want to learn game theory or for anyone who is interested in strategic thinking and decision making. The book provides clear explanations, examples, exercises, solutions, and illustrations that make game theory accessible and fun. Playing for Real is a must-read for anyone who wants to play for real in the game of life.
Here are some frequently asked questions about Playing for Real and game theory:
What are the prerequisites for reading Playing for Real?
You do not need any advanced mathematical background to read Playing for Real. The book assumes that you have some basic knowledge of algebra, calculus, probability, and logic. The book also provides some mathematical appendices that review some concepts and techniques that are used in game theory.
How long does it take to read Playing for Real?
It depends on your reading speed and level of interest. The book has about 700 pages and 21 chapters. You can read the book at your own pace and skip some chapters or sections that are less relevant to you. A reasonable estimate is that it would take you about 50 hours to read the whole book.
What are some other books on game theory that are similar to Playing for Real?
There are many other books on game theory that cover similar topics and applications as Playing for Real. Some examples are: A Course in Game Theory by Martin Osborne and Ariel Rubinstein, Game Theory: An Introduction by Steven Tadelis, An Introduction to Game Theory by Eric Rasmusen, Game Theory: Analysis of Conflict by Roger Myerson, and A Primer in Game Theory by Robert Gibbons.
What are some online resources that can help me learn game theory?
There are many online resources that can help you learn game theory. Some examples are: Game Theory I: An Introduction by Stanford University on Coursera, Game Theory by Khan Academy, Game Theory 101 by William Spaniel, Game Theory by The Ben Shapiro Show on YouTube, and Game Theory .net, a website that provides lectures, exercises, and interactive tools on game theory.
How can I apply game theory to real-life situations?
You can apply game theory to real-life situations by identifying the players, the actions, the payoffs, and the information structure of the situation. Then you can use game theory concepts and tools to analyze the strategic interaction among the players and predict the possible outcomes or behaviors. You can also use game theory to design better rules or mechanisms that can improve the efficiency or fairness of the situation. Game theory can help you understand and improve many aspects of your personal, professional, or social life.