E-Book Overview
This book examines why game theory has become such a popular tool of analysis. It investigates the deficiencies in this methodology and goes on to consider whether its popularity will fade or remain an important tool for economists. The book provides the reader with some basic concepts from noncooperative theory, and then goes on to explore the strengths, weaknesses, and future of the theory as a tool of economic modelling and analysis. All those interested in the applications of game theory to economics, from undergraduates to academics will find this study of particular value.
E-Book Content
Game Theory and Economic Modelling Kreps, David M Paul E. Holden Professor of Economics, Graduate School of Business , Stanford University
Contents 1. Introduction 2. The standard 3. Basic notions of non-cooperative game theory Strategic form games Extensive form games Extensive and strategic form games Dominance Nash equilibrium 4. The successes of game theory Taxonomy based on the strategic form Dynamics and extensive form games Incredible threats and incredible promises Credible threats and promises: Co-operation and reputation The importance of what players know about others Interactions among parties holding private information Concluding remarks 5. The problems of game theory The need for precise protocols Too many equilibria and no way to choose Choosing among equilibria with refinements The rules of the game 1
6. Bounded rationality and retrospection Why study Nash equilibria? The case for bounded rationality and retrospection A line of attack Historical antecedents and recent examples Objections to this general approach, with rebuttals Similarities: Or, Deduction and prospection is bounded rationality and retrospection The other problems of game theory Final words Bibliography Index
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Acknowledgements This book provides a lengthened account