Game Theory 101 Introduction

Instructor: William Spaniel

Overview

• Lecture series on basic introductory game theory.
• Duration: 30 to 40 videos.

What is Game Theory?

• Definition: Study of strategically interdependent behavior.
• Strategic Interdependence: Outcomes depend on actions of multiple players.
  • Can involve winning vs. losing.
  • Broader applicability (cooperation vs. competition).

Why Study Game Theory?

1. Theoretical Importance
   • Complex logic of interactive behavior requires solid theoretical frameworks.
   • Game theory provides accounting standards for logical consistency.
2. Practical Applications
   • Helps in connecting diverse situations and thinking on your feet.
   • Personal anecdote: used knowledge of game theory to navigate a police situation.

Course Structure

• Three Chapters

  1. Chapter 1: Simultaneous Move Games

     • Strategies developed independently.
     • Examples: soccer penalty kicks, police interrogations, stoplight decisions.
     • Key Topics:
       • Strict dominance
       • Iterated elimination of strictly dominated strategies
       • Pure strategy Nash equilibrium
       • Best responses
       • Mixed strategy Nash equilibrium
       • Weak dominance

  2. Chapter 2: Extensive Form Games

     • Players take turns making moves.
     • Examples: war plans, police searches.
     • Key Topics:
       • Backward induction
       • Sub-game perfect equilibrium
       • Credible threats
       • Commitment problems
       • Forward induction

  3. Chapter 3: Advanced Strategic Form Games

     • Generalizing chapter 1 concepts.
     • Key Topics:
       • Comparative statics
       • Knife edge equilibria
       • Symmetric zero-sum games

Prerequisites

• Generally, high school algebra is necessary.
• Basic understanding of calculus is useful but not mandatory (missing calculus won't affect understanding significantly).
• Personal reassurance: instructor succeeded in mathematics and now teaches game theory.

Grading and Textbook

• Grading: Online class; viewing this video earns you an A.
• Textbook Recommendation: "Game Theory 101: The Complete Textbook" written by the instructor.
  • Designed to complement video series with more examples.
  • Affordable price (~$3.99).
  • Aimed at teaching rather than being a reference manual.
• A la carte options for chapters available but more expensive than purchasing the full book.

Next Steps

• Upcoming topic: Solving a game, starting with the Prisoner's Dilemma.

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Reminder: Join the next video for further insights!