Customer Reviews

Game Theory

5 star:		(7)
4 star:		(2)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

This is a definitive reference text. It is not a self-study course in game theory, nor even a useful introduction. It functions best as a brush-up source, or a reference on equilibrium refinements, for those who already know the basics, and can work with a fairly technical presentation. It's very good especially on screening games and Bayesian-type information games.

For a more intuitive introduction to game theory, try a short little book by David Kreps called "Game Theory and Economic Modeling.".

The book does a pretty good job of covering Bayesian issues, but one would think that a big book would be better organized and would cover more topics.

I found it difficult to master the issues of equilibrium refinement and of mechanism design using this book and had to turn to outside sources at the time. Many of the problems would be helped by more "mechanical" examples on how to solve them, since the tools needed to solve many of these problems are probably new to a lot of students. The Tirole IO book contains some solved problems...I wish this book did, too.

Overall, it is a fine book...more than adequate. But it could be better.

The theory of games is now pervasive in the fields of economics, financial modeling, logistics, operations research, network engineering, and population biology. As such a background in game theory is an absolute necessity if one is to deal with problems in these areas. This book is an advanced treatment of game theory, and presupposes the reader already has had some exposure to the subject. There is an excellent set of exercises at the end of each chapter, and so the book can be used as a textbook or for self-study.

After an elementary example of a game in the introduction to motivate the subject, the authors begin in Part I of the book with the subject of static games with complete information. Strategic-form games are defined, along with dominated strategies, and the important concept of Nash equilibrium, the latter being introduced to deal with games that are not solvable by iterated strict dominance. For those with a background in elementary functional analysis, the authors prove that finite strategic-form game has a mixed-strategy equilibrium and prove that the Nash-Equilibrium has a closed graph. The concept of Nash equilibrium is extended to the concept of a correlated equilibrium, wherein each player can send another a private signal before they choose their strategy.

In Part II, the authors discuss dynamic games with complete information. Examples of these kinds of games include a sequential version of the battle of the sexes game, and a sequential version of matching pennies. The authors discuss subgame-perfect equilibria, wherein an n-tuple of strategies constitute Nash equilibria in every subgame. The Stackelberg model of duopoly is discussed along with the repeated Prisoner"s dilemna, the latter being an example of backward induction in finitely repeated games. A kind of generalization of the principle of optimality in dynamic programming is used to analyze perfect public equilibria via a tool called self-generation.

In Part III of the book, the authors discuss static games of incomplete information. Examples are discussed including Bayesian games, where at least one player is uncertain about another player"s payoff function, and first-price and second-price auctions. In first-price auctions, each player submits a sealed bid and the one with the highest bid obtains the item; in second-price auctions each player submits a sealed bid but the player submitting the highest bid gets to purchase the item for a cost given by the player with the second highest bid. The authors explain in detail the dominant strategies for these types of auctions. Bargaining with two-sided incomplete information is discussed and the optimal amount of trade is found from the linear equilibrium of the Chatterjee-Samuelson double action.

In Part IV, dynamic games of incomplete information are discussed by the authors. Examples that they discuss include signaling games such as the two-period reputation game, and Spence"s education game. Signaling is widely used by firms and organizations in spite of it being somewhat costly to do so. For example a public company may be trying to convince investors that it represents high returns. The authors show how to obtain sequential perfect Bayes equilibrium in these and other scenarios. The authors also discuss reputation effects in games, with an example being the chain-store game. The general case of single long-run players with reputation effects is treated in detail. Bargaining with sequential buyers is also discussed with examples given for one-sided asymmetric information and mechanism design.

The last part of the book discussed miscellaneous topics in game theory, including strategic stability, more discussion on signaling, finite strategic-form games, and supermodular games. The treatment is more complicated mathematically with emphasis on proving existence theorems for Nash equilibria and pure-strategy equilibria. The notion of a Markov perfect equilibrium is employed to discuss situations where the past has a direct influence on current opportunities. This brings in the fascinating subject of stochastic games, wherein current payoffs depend on the state of the game and on current actions, with the state evolving according to a Markov process. These are generalized to continuous time, leading to the famous differential games. Game theory under "common knowledge" is also discussed, with examples given of the "dirty face" games.

Some omissions in the book, which would have of course increased the size of the book substantially, include mathematical modeling of poker and other card games. These are complicated games in which to analyze, but they have taken on considerable importance in the casino industry in recent years.

If you are a Matematical Economist, and you like to study Game Theory or/and Adverse Selection, then this book is a must. It is wery precise when it comes to references, and it includes almost all significant contributions in the field. Sadley the book comes short on Moral Hazard, but that can be found elseware. Likewise if you look for Cooperative Game Theory, you wont find it here. The book is the best contribution I have found on Baysian topics

If you are going to do Micro at more than an undergraduate level, you are going to have this book on your shelf. It is quite comprehensive, although the notation is not always what one might be used to. I do share some of the misgivings voiced in other reviews -- topics sometimes don't appear in the order one might expect and the flow often may not seem natural. Also, the format of the presentation is unlike a mathematics text in that defibnitions, etc. may not always appear in nice blocks, etc. But at some stage, if you do enogh game theory, you will find yourself looking at it and then buying it.

If you are going to do Micro at more than an undergraduate level, you are going to have this book on your shelf. It is quite comprehensive, although the notation is not always what one might be used to. I do share some of the misgivings voiced in other reviews -- topics sometimes don't appear in the order one might expect and the flow often may not seem natural. Also, the format of the presentation is unlike a mathematics text in that defibnitions, etc. may not always appear in nice blocks, etc. and occassionaly I have found myself wishing for a bit more technical detail, for example on Bayesian Games. But at some stage, if you do enough game theory, you will find yourself looking at it and then buying it.

This is probably the best reference in game theory out there, and it also does a very good job in explaining difficult concepts. I've been studying from this book by my own and I'm very happy with it. I recommend it for anyone who is serious about learning game theory.

very informative volume, good price, and a very very good view in the world of game theory.
definitely a must buy for game theory practitioners

If that is supposed to be your text book, then fine. Otherwise, I would not spend money on it. For the purposes of learning Game Theory overall there are many better sources. This book is too old, to my mind.

It's a good book. But it needs some preminary work before read this book.