Game theory
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Game theory is a study of strategic decision making. Specifically, it is "the study of mathematical models of conflict and cooperation between intelligent rational decisionmakers".^{[1]} An alternative term suggested "as a more descriptive name for the discipline" is interactive decision theory.^{[2]} Game theory is mainly used in economics, political science, and psychology, as well as logic, computer science, and biology. The subject first addressed zerosum games, such that one person's gains exactly equal net losses of the other participant or participants. Today, however, game theory applies to a wide range of behavioral relations, and has developed into an umbrella term for the logical side of decision science, including both humans and nonhumans (e.g. computers, insects/animals).
Modern game theory began with the idea regarding the existence of mixedstrategy equilibria in twoperson zerosum games and its proof by cooperative games of several players. The second edition of this book provided an axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat decisionmaking under uncertainty.
This theory was developed extensively in the 1950s by many scholars. Game theory was later explicitly applied to biology in the 1970s, although similar developments go back at least as far as the 1930s. Game theory has been widely recognized as an important tool in many fields. With the Nobel Memorial Prize in Economic Sciences going to game theorist Jean Tirole in 2014, eleven gametheorists have now won the economics Nobel Prize. John Maynard Smith was awarded the Crafoord Prize for his application of game theory to biology.
Contents

Representation of games 1
 Extensive form 1.1
 Normal form 1.2
 Characteristic function form 1.3

General and applied uses 2
 Description and modeling 2.1
 Prescriptive or normative analysis 2.2
 Economics and business 2.3
 Political science 2.4
 Biology 2.5
 Computer science and logic 2.6
 Philosophy 2.7

Types of games 3
 Cooperative / Noncooperative 3.1
 Symmetric / Asymmetric 3.2
 Zerosum / Nonzerosum 3.3
 Simultaneous / Sequential 3.4
 Perfect information and imperfect information 3.5
 Combinatorial games 3.6
 Infinitely long games 3.7
 Discrete and continuous games 3.8
 Differential games 3.9
 Manyplayer and population games 3.10
 Stochastic outcomes (and relation to other fields) 3.11
 Metagames 3.12
 History 4
 In popular culture 5
 See also 6
 Notes 7

References and further reading 8
 Textbooks and general references 8.1
 Historically important texts 8.2
 Other print references 8.3
 Websites 8.4
Representation of games
The games studied in game theory are welldefined mathematical objects. To be fully defined, a game must specify the following elements: the players of the game, the information and actions available to each player at each decision point, and the payoffs for each outcome. (Rasmusen refers to these four "essential elements" by the acronym "PAPI".)^{[3]} A game theorist typically uses these elements, along with a solution concept of their choosing, to deduce a set of equilibrium strategies for each player such that, when these strategies are employed, no player can profit by unilaterally deviating from their strategy. These equilibrium strategies determine an equilibrium to the game—a stable state in which either one outcome occurs or a set of outcomes occur with known probability.
Most cooperative games are presented in the characteristic function form, while the extensive and the normal forms are used to define noncooperative games.
Extensive form
The extensive form can be used to formalize games with a time sequencing of moves. Games here are played on trees (as pictured to the left). Here each vertex (or node) represents a point of choice for a player. The player is specified by a number listed by the vertex. The lines out of the vertex represent a possible action for that player. The payoffs are specified at the bottom of the tree. The extensive form can be viewed as a multiplayer generalization of a decision tree. (Fudenberg & Tirole 1991, p. 67)
In the game pictured to the left, there are two players. Player 1 moves first and chooses either F or U. Player 2 sees Player 1's move and then chooses A or R. Suppose that Player 1 chooses U and then Player 2 chooses A, then Player 1 gets 8 and Player 2 gets 2.
The extensive form can also capture simultaneousmove games and games with imperfect information. To represent it, either a dotted line connects different vertices to represent them as being part of the same information set (i.e. the players do not know at which point they are), or a closed line is drawn around them. (See example in the imperfect information section.)
Normal form
Player 2 chooses Left 
Player 2 chooses Right 

Player 1 chooses Up 
4, 3  –1, –1 
Player 1 chooses Down 
0, 0  3, 4 
Normal form or payoff matrix of a 2player, 2strategy game 
The normal (or strategic form) game is usually represented by a matrix which shows the players, strategies, and payoffs (see the example to the right). More generally it can be represented by any function that associates a payoff for each player with every possible combination of actions. In the accompanying example there are two players; one chooses the row and the other chooses the column. Each player has two strategies, which are specified by the number of rows and the number of columns. The payoffs are provided in the interior. The first number is the payoff received by the row player (Player 1 in our example); the second is the payoff for the column player (Player 2 in our example). Suppose that Player 1 plays Up and that Player 2 plays Left. Then Player 1 gets a payoff of 4, and Player 2 gets 3.
When a game is presented in normal form, it is presumed that each player acts simultaneously or, at least, without knowing the actions of the other. If players have some information about the choices of other players, the game is usually presented in extensive form.
Every extensiveform game has an equivalent normalform game, however the transformation to normal form may result in an exponential blowup in the size of the representation, making it computationally impractical.(LeytonBrown & Shoham 2008, p. 35)
Characteristic function form
In games that possess removable utility separate rewards are not given; rather, the characteristic function decides the payoff of each unity. The idea is that the unity that is 'empty', so to speak, does not receive a reward at all.
The origin of this form is to be found in John von Neumann and Oskar Morgenstern's book; when looking at these instances, they guessed that when a union \mathbf{C} appears, it works against the fraction \left(\frac{\mathbf{N}}{\mathbf{C}}\right) as if two individuals were playing a normal game. The balanced payoff of C is a basic function. Although there are differing examples that help determine coalitional amounts from normal games, not all appear that in their function form can be derived from such.
Formally, a characteristic function is seen as: (N,v), where N represents the group of people and v:2^N \to \mathbf{R} is a normal utility.
Such characteristic functions have expanded to describe games where there is no removable utility.
General and applied uses
As a method of applied mathematics, game theory has been used to study a wide variety of human and animal behaviors. It was initially developed in economics to understand a large collection of economic behaviors, including behaviors of firms, markets, and consumers. The first use of gametheoretic analysis was by Antoine Augustin Cournot in 1838 with his solution of the Cournot duopoly. The use of game theory in the social sciences has expanded, and game theory has been applied to political, sociological, and psychological behaviors as well.
Although pretwentieth century naturalists such as Charles Darwin made gametheoretic kinds of statements, the use of gametheoretic analysis in biology began with Ronald Fisher's studies of animal behavior during the 1930s. This work predates the name "game theory", but it shares many important features with this field. The developments in economics were later applied to biology largely by John Maynard Smith in his book Evolution and the Theory of Games.
In addition to being used to describe, predict, and explain behavior, game theory has also been used to develop theories of ethical or normative behavior and to prescribe such behavior.^{[4]} In economics and philosophy, scholars have applied game theory to help in the understanding of good or proper behavior. Gametheoretic arguments of this type can be found as far back as Plato.^{[5]}
Description and modeling
The first known use is to describe and model how human populations behave. Some scholars believe that by finding the equilibria of games they can predict how actual human populations will behave when confronted with situations analogous to the game being studied. This particular view of game theory has come under recent criticism. First, it is criticized because the assumptions made by game theorists are often violated. Game theorists may assume players always act in a way to directly maximize their wins (the Homo economicus model), but in practice, human behavior often deviates from this model. Explanations of this phenomenon are many; irrationality, new models of deliberation, or even different motives (like that of altruism). Game theorists respond by comparing their assumptions to those used in physics. Thus while their assumptions do not always hold, they can treat game theory as a reasonable scientific ideal akin to the models used by physicists. However, in the centipede game, guess 2/3 of the average game, and the dictator game, people regularly do not play Nash equilibria. These experiments have demonstrated that individuals do not play equilibrium strategies. There is an ongoing debate regarding the importance of these experiments.^{[6]}
Alternatively, some authors claim that Nash equilibria do not provide predictions for human populations, but rather provide an explanation for why populations that play Nash equilibria remain in that state. However, the question of how populations reach those points remains open.
Some game theorists, following the work of evolutionary game theory in order to resolve these issues. These models presume either no rationality or bounded rationality on the part of players. Despite the name, evolutionary game theory does not necessarily presume natural selection in the biological sense. Evolutionary game theory includes both biological as well as cultural evolution and also models of individual learning (for example, fictitious play dynamics).
Prescriptive or normative analysis
Cooperate  Defect  
Cooperate  1, 1  10, 0 
Defect  0, 10  5, 5 
The Prisoner's Dilemma 
On the other hand, some scholars see game theory not as a predictive tool for the behavior of human beings, but as a suggestion for how people ought to behave. Since a strategy, corresponding to a Nash equilibrium of a game constitutes one's best response to the actions of the other players – provided they are in (the same) Nash equilibrium – playing a strategy that is part of a Nash equilibrium seems appropriate. However, the rationality of such a decision has been proved only for special cases. This normative use of game theory has also come under criticism. First, in some cases it is appropriate to play a nonequilibrium strategy if one expects others to play nonequilibrium strategies as well. For an example, see guess 2/3 of the average.
Second, the prisoner's dilemma presents another potential counterexample. In the prisoner's dilemma, each player pursuing their own selfinterest leads both players to be worse off than had they not pursued their own selfinterests.
Economics and business
Game theory is a major method used in
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 Hazewinkel, Michiel, ed. (2001), "Games, theory of",
 Paul Walker: History of Game Theory Page.
 David Levine: Game Theory. Papers, Lecture Notes and much more stuff.
 Alvin Roth: Game Theory and Experimental Economics page at the Wayback Machine (archived March 17, 2013) — Comprehensive list of links to game theory information on the Web
 Adam Kalai: Game Theory and Computer Science — Lecture notes on Game Theory and Computer Science
 Mike Shor: Game Theory .net — Lecture notes, interactive illustrations and other information.
 Jim Ratliff's Graduate Course in Game Theory (lecture notes).
 Don Ross: Review Of Game Theory in the Stanford Encyclopedia of Philosophy.
 Bruno Verbeek and Christopher Morris: Game Theory and Ethics
 Elmer G. Wiens: Game Theory — Introduction, worked examples, play online twoperson zerosum games.
 Marek M. Kaminski: Game Theory and Politics — Syllabuses and lecture notes for game theory and political science.
 Web sites on game theory and social interactions
 Kesten Green's Conflict Forecasting at the Wayback Machine (archived April 11, 2011) — See Papers for evidence on the accuracy of forecasts from game theory and other methods.
 McKelvey, Richard D., McLennan, Andrew M., and Turocy, Theodore L. (2007) Gambit: Software Tools for Game Theory.
 Benjamin Polak: Open Course on Game Theory at Yale videos of the course
 Benjamin Moritz, Bernhard Könsgen, Danny Bures, Ronni Wiersch, (2007) SpieltheorieSoftware.de: An application for Game Theory implemented in JAVA.
 Antonin Kucera: Stochastic TwoPlayer Games.
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 Shapley, L.S. (1953), A Value for nperson Games, In: Contributions to the Theory of Games volume II, H. W. Kuhn and A. W. Tucker (eds.)
 Shapley, L.S. (1953), Stochastic Games, Proceedings of National Academy of Science Vol. 39, pp. 1095–1100.
 von Neumann, John (1928), "Zur Theorie der Gesellschaftsspiele", English translation: "On the Theory of Games of Strategy," in A. W. Tucker and R. D. Luce, ed. (1959), Contributions to the Theory of Games, v. 4, p. 42. Princeton University Press.

 reprinted edition: R. Duncan Luce ; Howard Raiffa (1989), Games and decisions: introduction and critical survey, New York:
 Aumann, R.J. and Shapley, L.S. (1974), Values of NonAtomic Games, Princeton University Press
Historically important texts
 Gintis, Herbert (2000), Game theory evolving: a problemcentered introduction to modeling strategic behavior, Princeton University Press,
 Green, Jerry R.; . Presents game theory in formal way suitable for graduate level.
 edited by Vincent F. Hendricks, Pelle G. Hansen. (2007), Hansen, Pelle G.; Hendricks, Vincent F., eds., Game Theory: 5 Questions, New York, London: Automatic Press / VIP, . Snippets from interviews.
 Howard, Nigel (1971), Paradoxes of Rationality: Games, Metagames, and Political Behavior, Cambridge, Massachusetts: The MIT Press,
 Julmi, Christian (2012), Introduction to Game Theory, Copenhagen: BookBooN,
 LeytonBrown, Kevin; Shoham, Yoav (2008), Essentials of Game Theory: A Concise, Multidisciplinary Introduction, San Rafael, CA: Morgan & Claypool Publishers, . An 88page mathematical introduction; free online at many universities.
 Miller, James H. (2003), Game theory at work: how to use game theory to outthink and outmaneuver your competition, New York: . Suitable for a general audience.
 Osborne, Martin J. (2004), An introduction to game theory, Oxford University Press, . Undergraduate textbook.
 Papayoanou, Paul (2010), Game Theory for Business, Probabilistic Publishing, . Primer for business men and women.
 Petrosyan, Leon; Zenkevich, Nikolay (1996), Game Theory (Series on Optimization, 3), World Scientific Publishers,
 Osborne, Martin J.; . A modern introduction at the graduate level.
 Poundstone, William (1992), Prisoner's Dilemma: John von Neumann, Game Theory and the Puzzle of the Bomb, Anchor, . A general history of game theory and game theoreticians.
 Rasmusen, Eric (2006), Games and Information: An Introduction to Game Theory (4th ed.), WileyBlackwell,
 Shoham, Yoav; LeytonBrown, Kevin (2009), Multiagent Systems: Algorithmic, GameTheoretic, and Logical Foundations, New York: . A comprehensive reference from a computational perspective; downloadable free online.
 Williams, John Davis (1954), The Compleat Strategyst: Being a Primer on the Theory of Games of Strategy (PDF), Santa Monica: RAND Corp., Praised primer and popular introduction for everybody, never out of print.
 Roger McCain's Game Theory: A Nontechnical Introduction to the Analysis of Strategy (Revised Edition)
 Christopher Griffin (2010) Game Theory: Penn State Math 486 Lecture Notes, pp. 169, CCBYNCSA license, suitable introduction for undergraduates
 Webb, James N. (2007), Game theory: decisions, interaction and evolution, Springer undergraduate mathematics series, Springer, Consistent treatment of game types usually claimed by different applied fields, e.g. Markov decision processes.
 Joseph E. Harrington (2008) Games, strategies, and decision making, Worth, ISBN 0716766302. Textbook suitable for undergraduates in applied fields; numerous examples, fewer formalisms in concept presentation.
 Drew Fudenberg, David K Levine, ed. (2008). A LongRun Collaboration on LongRun Games. Hackensack, New Jersey: World Scientific. p. 416.
 Adam Brandenburger (2014). The Language of Game Theory: Putting Epistemics into the Mathematics of Games. World Scientific Series in Economic Theory: Vol. 5. Hackensack, New Jersey: World Scientific. p. 300.
 Roger A McCain (2014). Game Theory: A Nontechnical Introduction to the Analysis of Strategy (3rd Edition). Hackensack, New Jersey: World Scientific. p. 600.

 Published in Europe as Robert Gibbons (2001), A Primer in Game Theory, London: Harvester Wheatsheaf, .
 Description and Introduction, pp. 1–25.
 Dutta, Prajit K. (1999), Strategies and games: theory and practice, . Suitable for undergraduate and business students.
 Fernandez, L F.; Bierman, H S. (1998), Game theory with economic applications, . Suitable for upperlevel undergraduates.
 Fudenberg, Drew; . Acclaimed reference text. Description.
 Gibbons, Robert D. (1992), Game theory for applied economists, . Suitable for advanced undergraduates.
 "game theory" by Robert J. Aumann. Abstract.
 "game theory in economics, origins of," by Robert Leonard. Abstract.
 "behavioural economics and game theory" by Faruk Gul. Abstract.
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 The New Palgrave Dictionary of Economics (2008). 2nd Edition:
Textbooks and general references
References and further reading
 ^ Roger B. Myerson (1991). Game Theory: Analysis of Conflict, Harvard University Press, p. 1. Chapterpreview links, pp. vii–xi.
 ^ R. J. Aumann ([1987] 2008). "game theory," Introduction, The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.

^ ^{a} ^{b} • Eric Rasmusen (2007). Games and Information, 4th ed. Description and chapterpreview.
• David M. Kreps (1990). Game Theory and Economic Modelling. Description.
• R. Aumann and S. Hart, ed. (1992, 2002). Handbook of Game Theory with Economic Applications v. 1, ch. 3–6 and v. 3, ch. 43.  ^ ^{a} ^{b} Colin F. Camerer (2003). Behavioral Game Theory: Experiments in Strategic Interaction, pp. 5–7 (scroll to at 1.1 What Is Game Theory Good For?).
 ^ Ross, Don. "Game Theory". The Stanford Encyclopedia of Philosophy (Spring 2008 Edition). Edward N. Zalta (ed.). Retrieved 20080821.
 ^ Experimental work in game theory goes by many names, experimental economics, behavioral economics, and behavioural game theory are several. For a recent discussion, see Colin F. Camerer (2003). Behavioral Game Theory: Experiments in Strategic Interaction (description and Introduction, pp. 1–25).

^ • At JEL:C7 of the Journal of Economic Literature classification codes.
• R.J. Aumann (2008). "game theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• Martin Shubik (1981). "Game Theory Models and Methods in Political Economy," in Kenneth Arrow and Michael Intriligator, ed., Handbook of Mathematical Economics, v. 1, pp. 285–330 doi:10.1016/S15734382(81)010114.
• Carl Shapiro (1989). "The Theory of Business Strategy," RAND Journal of Economics, 20(1), pp. 125–137 JSTOR 2555656.  ^ N. Agarwal and P. Zeephongsekul. Psychological Pricing in Mergers & Acquisitions using Game Theory, School of Mathematics and Geospatial Sciences, RMIT University, Melbourne

^ • Leigh Tesfatsion (2006). "AgentBased Computational Economics: A Constructive Approach to Economic Theory," ch. 16, Handbook of Computational Economics, v. 2, pp. 831880 doi:10.1016/S15740021(05)020162.
• Joseph Y. Halpern (2008). "computer science and game theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. 
^ • From The New Palgrave Dictionary of Economics (2008), 2nd Edition:
Roger B. Myerson. "mechanism design." Abstract.
_____. "revelation principle." Abstract.
• Tuomas Sandholm. "computing in mechanism design." Abstract.
• Noam Nisan and Amir Ronen (2001). "Algorithmic Mechanism Design," Games and Economic Behavior, 35(1–2), pp. 166–196.
• Noam Nisan et al., ed. (2007). Algorithmic Game Theory, Cambridge University Press. Description.  ^ R. Aumann and S. Hart, ed., 1994. Handbook of Game Theory with Economic Applications, v. 2, outline links, ch. 30: "Voting Procedures" & ch. 31: "Social Choice."

^ • Vernon L. Smith, 1992. "Game Theory and Experimental Economics: Beginnings and Early Influences," in E. R. Weintraub, ed., Towards a History of Game Theory, pp. 241–282.
• _____, 2001. "Experimental Economics," International Encyclopedia of the Social & Behavioral Sciences, pp. 5100–5108. Abstract per sect. 1.1 & 2.1.
• Charles R. Plott and Vernon L. Smith, ed., 2008. Handbook of Experimental Economics Results, v. 1, Elsevier, Part 4, Games, ch. 45–66.
• Vincent P. Crawford (1997). "Theory and Experiment in the Analysis of Strategic Interaction," in Advances in Economics and Econometrics: Theory and Applications, pp. 206–242. Cambridge. Reprinted in Colin F. Camerer et al., ed. (2003). Advances in Behavioral Economics, Princeton. 1986–2003 papers. Description, preview, Princeton, ch. 12.
• Martin Shubik, 2002. "Game Theory and Experimental Gaming," in R. Aumann and S. Hart, ed., Handbook of Game Theory with Economic Applications, Elsevier, v. 3, pp. 2327–2351. doi:10.1016/S15740005(02)030254. 
^ From The New Palgrave Dictionary of Economics (2008), 2nd Edition:
• Faruk Gul. "behavioural economics and game theory." Abstract.
• Colin F. Camerer. "behavioral game theory." Abstract.
• _____ (1997). "Progress in Behavioral Game Theory," Journal of Economic Perspectives, 11(4), p. 172, pp. 167–188.
• _____ (2003). Behavioral Game Theory, Princeton. Description, preview ([ctrl]+), and ch. 1 link.
• _____, Matthew Rabin, ed. (2003). Advances in Behavioral Economics, Princeton. 1986–2003 papers. Description, contents, and preview.
• Drew Fudenberg (2006). "Advancing Beyond Advances in Behavioral Economics," Journal of Economic Literature, 44(3), pp. 694–711 JSTOR 30032349. 
^ •
• Kyle Bagwell and Asher Wolinsky (2002). "Game theory and Industrial Organization," ch. 49, Handbook of Game Theory with Economic Applications, v. 3, pp. 1851–1895.
• Martin Shubik (1959). Strategy and Market Structure: Competition, Oligopoly, and the Theory of Games, Wiley. Description and review extract.
• _____ with Richard Levitan (1980). Market Structure and Behavior, Harvard University Press. Review extract. 
^ • Martin Shubik (1981). "Game Theory Models and Methods in Political Economy," in Handbook of Mathematical Economics, v. 1, pp. 285–330 doi:10.1016/S15734382(81)010114.
•_____ (1987). A GameTheoretic Approach to Political Economy. MIT Press. Description. 
^ • Martin Shubik (1978). "Game Theory: Economic Applications," in W. Kruskal and J.M. Tanur, ed., International Encyclopedia of Statistics, v. 2, pp. 372–78.
• Robert Aumann and Sergiu Hart, ed. Handbook of Game Theory with Economic Applications (scrollable to chapteroutline or abstract links): 1992. v. 1; 1994. v. 2; 2002. v. 3.
 ^ Gametheoretic model to examine the two tradeoffs in the acquisition of information for a careful balancing act Research paper INSEAD
 ^ Options Games: Balancing the tradeoff between flexibility and commitment. Europeanfinancialreview.com (20120215). Retrieved on 20130103.
 ^ Expected Utility in the Context of a Game
 ^ Morrison, Andrew Stumpff, "Eminent Legal Philosophers, or Yes, Law is the Command of the Sovereign", at 812 (2013). Available at SSRN
 ^ Wood, Peter John. (2011, February). "Climate change and game theory," Ecological Economics Review 1219: 15370.
 ^ Maynard Smith, J. (1974). "The theory of games and the evolution of animal conflicts". Journal of Theoretical Biology 47 (1): 209–221.
 ^ Evolutionary Game Theory (Stanford Encyclopedia of Philosophy). Plato.stanford.edu. Retrieved on 20130103.
 ^ ^{a} ^{b} Biological Altruism (Stanford Encyclopedia of Philosophy). Seop.leeds.ac.uk. Retrieved on 20130103.
 ^ Noam Nisan et al., ed. (2007). Algorithmic Game Theory, Cambridge University Press. Description.
 ^ Nisan, Noam; Ronen, Amir (2001), "Algorithmic Mechanism Design", Games and Economic Behavior 35 (1–2): 166–196,

^ • Joseph Y. Halpern (2008). "computer science and game theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• Shoham, Yoav (2008), "Computer Science and Game Theory", Communications of the ACM 51 (8): 75–79,
• Littman, Amy;  ^ UllmannMargalit, E. (1977), The Emergence of Norms, Oxford University Press,
 ^ Bicchieri, C. (2006), The Grammar of Society: the Nature and Dynamics of Social Norms, Cambridge University Press,
 ^ Bicchieri, Cristina (1989), "SelfRefuting Theories of Strategic Interaction: A Paradox of Common Knowledge", Erkenntnis 30 (1–2): 69–85,
 ^ The Dynamics of Rational Deliberation, Harvard University Press, 1990,
 ^ Bicchieri, Cristina; Jeffrey, Richard; Skyrms, Brian, eds. (1999), "Knowledge, Belief, and Counterfactual Reasoning in Games", The Logic of Strategy, New York: Oxford University Press,
 ^ For a more detailed discussion of the use of game theory in ethics, see the Stanford Encyclopedia of Philosophy's entry game theory and ethics.
 ^ Harold Houba, Wilko Bolt. Credible Threats in Negotiations. A Gametheoretic Approach. Chapter 4. The Nash Program. ISBN 9781402071836.
 ^ ^{a} ^{b}
 ^
 ^
 ^ Robert A. Hearn; Erik D. Demaine (2009), Games, Puzzles, and Computation, A K Peters, Ltd.,
 ^ M. Tim Jones (2008), Artificial Intelligence: A Systems Approach, Jones & Bartlett Learning, pp. 106–118,
 ^ (Russian) Petrosjan, L.A. and Murzov, N.V. (1966). Gametheoretic problems of mechanics. Litovsk. Mat. Sb. 6, 423–433.
 ^ ^{a} ^{b} Hugh Brendan McMahan (2006), Robust Planning in Domains with Stochastic Outcomes, Adversaries, and Partial Observability, CMUCS06166, pp. 3–4
 ^ ^{a} ^{b} Bellhouse, David (2007), "The Problem of Waldegrave", Journal Électronique d'Histoire des Probabilités et de la Statistique 3 (2)
 ^ James Madison, Vices of the Political System of the United States, April 1787.
 ^ Jack Rakove, "James Madison and the Constitution", History Now, Issue 13, September 2007.
 ^ Neumann, J. v. (1928), "Zur Theorie der Gesellschaftsspiele",
 ^ Leonard, Robert (2010), Von Neumann, Morgenstern, and the Creation of Game Theory, New York: Cambridge University Press,
 ^ Although common knowledge was first discussed by the philosopher David Lewis in his dissertation (and later book) Convention in the late 1960s, it was not widely considered by economists until Robert Aumann's work in the 1970s.
 ^ Sylvia Nasar, A Beautiful Mind, Simon & Schuster, 1998. ISBN 0684819066.
 ^ Simon Singh "Between Genius and Madness", New York Times, June 14, 1998.
 ^ Heinlein, Robert A. (1959), Starship Troopers
Notes
 Lists
 AI effect
 Applications of artificial intelligence
 Chainstore paradox
 Collective Intentionality
 Combinatorial game theory
 Confrontation analysis
 Glossary of game theory
 Intrahousehold bargaining
 Parrondo's paradox
 Quantum game theory
 Quantum refereed game
 Rationality
 Reverse game theory
 Selfconfirming equilibrium
See also
The film Dr. Strangelove satirizes game theoretic ideas about deterrence theory. For example, nuclear deterrence depends on the threat to retaliate catastrophically if a nuclear attack is detected. A game theorist might argue that such threats can fail to be credible, in the sense that they can lead to subgame imperfect equilibria. The movie takes this idea one step further, with the Russians irrevocably committing to a catastrophic nuclear response without making the threat public.
One of the main gameplay decisionmaking mechanics of the video game Zero Escape: Virtue's Last Reward is based on game theory. Some of the characters even reference the prisoner's dilemma.
"Games theory" and "theory of games" are mentioned in the military science fiction novel Starship Troopers by Robert A. Heinlein.^{[50]} In the 1997 film of the same name, the character Carl Jenkins refers to his assignment to military intelligence as to "games and theory."
Based on the book by Sylvia Nasar,^{[48]} the life story of game theorist and mathematician John Nash was turned into the biopic A Beautiful Mind starring Russell Crowe.^{[49]}
In popular culture
In 2012, Alvin E. Roth and Lloyd S. Shapley were awarded the Nobel Prize in Economics "for the theory of stable allocations and the practice of market design."
In 2007, Leonid Hurwicz, together with Eric Maskin and Roger Myerson, was awarded the Nobel Prize in Economics "for having laid the foundations of mechanism design theory." Myerson's contributions include the notion of proper equilibrium, and an important graduate text: Game Theory, Analysis of Conflict (Myerson 1997). Hurwicz introduced and formalized the concept of incentive compatibility.
In 2005, game theorists Thomas Schelling and Robert Aumann followed Nash, Selten and Harsanyi as Nobel Laureates. Schelling worked on dynamic models, early examples of evolutionary game theory. Aumann contributed more to the equilibrium school, introducing an equilibrium coarsening, correlated equilibrium, and developing an extensive formal analysis of the assumption of common knowledge and of its consequences.
In the 1970s, game theory was extensively applied in biology, largely as a result of the work of John Maynard Smith and his evolutionarily stable strategy. In addition, the concepts of correlated equilibrium, trembling hand perfection, and common knowledge^{[47]} were introduced and analyzed.
In 1965, Reinhard Selten introduced his solution concept of subgame perfect equilibria, which further refined the Nash equilibrium (later he would introduce trembling hand perfection as well). In 1967, John Harsanyi developed the concepts of complete information and Bayesian games. Nash, Selten and Harsanyi became Economics Nobel Laureates in 1994 for their contributions to economic game theory.
Game theory experienced a flurry of activity in the 1950s, during which time the concepts of the core, the extensive form game, fictitious play, repeated games, and the Shapley value were developed. In addition, the first applications of game theory to philosophy and political science occurred during this time.
In 1950, the first mathematical discussion of the noncooperative games in addition to cooperative ones.
Game theory did not really exist as a unique field until John von Neumann published a paper in 1928.^{[45]} Von Neumann's original proof used Brouwer's fixedpoint theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by his 1944 book Theory of Games and Economic Behavior. The second edition of this book provided an axiomatic theory of utility, which reincarnated Daniel Bernoulli's old theory of utility (of the money) as an independent discipline. Von Neumann's work in game theory culminated in this 1944 book. This foundational work contains the method for finding mutually consistent solutions for twoperson zerosum games. During the following time period, work on game theory was primarily focused on cooperative game theory, which analyzes optimal strategies for groups of individuals, presuming that they can enforce agreements between them about proper strategies.^{[46]}
The Danish mathematician Zeuthen proved that the mathematical model had a winning strategy by using Brouwer's fixed point theorem. In his 1938 book Applications aux Jeux de Hasard and earlier notes, Émile Borel proved a minimax theorem for twoperson zerosum matrix games only when the payoff matrix was symmetric. Borel conjectured that nonexistence of mixedstrategy equilibria in twoperson zerosum games would occur, a conjecture that was proved false.
Early discussions of examples of twoperson games occurred long before the rise of modern, mathematical game theory. The first known discussion of game theory occurred in a letter written by James Waldegrave in 1713.^{[42]} In this letter, Waldegrave provides a minimax mixed strategy solution to a twoperson version of the card game le Her. James Madison made what we now recognize as a gametheoretic analysis of the ways states can be expected to behave under different systems of taxation.^{[43]}^{[44]} In his 1838 Recherches sur les principes mathématiques de la théorie des richesses (Researches into the Mathematical Principles of the Theory of Wealth), Antoine Augustin Cournot considered a duopoly and presents a solution that is a restricted version of the Nash equilibrium.
History
The term metagame analysis is also used to refer to a practical approach developed by Nigel Howard (Howard 1971) whereby a situation is framed as a strategic game in which stakeholders try to realise their objectives by means of the options available to them. Subsequent developments have led to the formulation of confrontation analysis.
These are games the play of which is the development of the rules for another game, the target or subject game. Metagames seek to maximize the utility value of the rule set developed. The theory of metagames is related to mechanism design theory.
Metagames
General models that include all elements of stochastic outcomes, adversaries, and partial or noisy observability (of moves by other players) have also been studied. The "gold standard" is considered to be partially observable stochastic game (POSG), but few realistic problems are computationally feasible in POSG representation.^{[41]}
For some problems, different approaches to modeling stochastic outcomes may lead to different solutions. For example, the difference in approach between MDPs and the minimax solution is that the latter considers the worstcase over a set of adversarial moves, rather than reasoning in expectation about these moves given a fixed probability distribution. The minimax approach may be advantageous where stochastic models of uncertainty are not available, but may also be overestimating extremely unlikely (but costly) events, dramatically swaying the strategy in such scenarios if it is assumed that an adversary can force such an event to happen.^{[41]} (See Black swan theory for more discussion on this kind of modeling issue, particularly as it relates to predicting and limiting losses in investment banking.)
Stochastic outcomes can also be modeled in terms of game theory by adding a randomly acting player who makes "chance moves" ("moves by nature") (Osborne & Rubinstein 1994). This player is not typically considered a third player in what is otherwise a twoplayer game, but merely serves to provide a roll of the dice where required by the game.
Individual decision problems with stochastic outcomes are sometimes considered "oneplayer games". These situations are not considered game theoretical by some authors. They may be modeled using similar tools within the related disciplines of decision theory, operations research, and areas of artificial intelligence, particularly AI planning (with uncertainty) and multiagent system. Although these fields may have different motivators, the mathematics involved are substantially the same, e.g. using Markov decision processes (MDP).
Stochastic outcomes (and relation to other fields)
Games with an arbitrary, but finite, number of players are often called nperson games (Luce & Raiffa 1957). Webb 2007).
Manyplayer and population games
A particular case of differential games are the games with a random time horizon.^{[40]} In such games, the terminal time is a random variable with a given probability distribution function. Therefore, the players maximize the mathematical expectation of the cost function. It was shown that the modified optimization problem can be reformulated as a discounted differential game over an infinite time interval.
Differential games such as the continuous pursuit and evasion game are continuous games where the evolution of the players' state variables is governed by differential equations. The problem of finding an optimal strategy in a differential game is closely related to the optimal control theory. In particular, there are two types of strategies: the openloop strategies are found using the Pontryagin maximum principle while the closedloop strategies are found using Bellman's Dynamic Programming method.
Differential games
Much of game theory is concerned with finite, discrete games, that have a finite number of players, moves, events, outcomes, etc. Many concepts can be extended, however. Continuous games allow players to choose a strategy from a continuous strategy set. For instance, Cournot competition is typically modeled with players' strategies being any nonnegative quantities, including fractional quantities.
Discrete and continuous games
The focus of attention is usually not so much on the best way to play such a game, but whether one player has a winning strategy. (It can be proven, using the axiom of choice, that there are games – even with perfect information and where the only outcomes are "win" or "lose" – for which neither player has a winning strategy.) The existence of such strategies, for cleverly designed games, has important consequences in descriptive set theory.
Games, as studied by economists and realworld game players, are generally finished in finitely many moves. Pure mathematicians are not so constrained, and set theorists in particular study games that last for infinitely many moves, with the winner (or other payoff) not known until after all those moves are completed.
Infinitely long games
Research in artificial intelligence has addressed both perfect and imperfect (or incomplete) information games that have very complex combinatorial structures (like chess, go, or backgammon) for which no provable optimal strategies have been found. The practical solutions involve computational heuristics, like alphabeta pruning or use of artificial neural networks trained by reinforcement learning, which make games more tractable in computing practice.^{[35]}^{[39]}
Games of perfect information have been studied in combinatorial game theory, which has developed novel representations, e.g. surreal numbers, as well as combinatorial and algebraic (and sometimes nonconstructive) proof methods to solve games of certain types, including "loopy" games that may result in infinitely long sequences of moves. These methods address games with higher combinatorial complexity than those usually considered in traditional (or "economic") game theory.^{[36]}^{[37]} A typical game that has been solved this way is hex. A related field of study, drawing from computational complexity theory, is game complexity, which is concerned with estimating the computational difficulty of finding optimal strategies.^{[38]}
Games in which the difficulty of finding an optimal strategy stems from the multiplicity of possible moves are called combinatorial games. Examples include chess and go. Games that involve imperfect or incomplete information may also have a strong combinatorial character, for instance backgammon. There is no unified theory addressing combinatorial elements in games. There are, however, mathematical tools that can solve particular problems and answer general questions.^{[35]}
Combinatorial games
Perfect information is often confused with complete information, which is a similar concept. Complete information requires that every player know the strategies and payoffs available to the other players but not necessarily the actions taken. Games of incomplete information can be reduced, however, to games of imperfect information by introducing "moves by nature" (LeytonBrown & Shoham 2008, p. 60).
An important subset of sequential games consists of games of perfect information. A game is one of perfect information if all players know the moves previously made by all other players. Thus, only sequential games can be games of perfect information because players in simultaneous games do not know the actions of the other players. Most games studied in game theory are imperfectinformation games. Interesting examples of perfectinformation games include the ultimatum game and centipede game. Recreational games of perfect information games include chess, go and mancala. Many card games are games of imperfect information, such as poker or contract bridge.
Perfect information and imperfect information
Sequential  Simultaneous  

Normally denoted by  Decision trees  Payoff matrices 
Prior knowledge
of opponent's move? 
Yes  No 
Time axis?  Yes  No 
Also known as 
Extensiveform game
Extensive game 
Strategy game
Strategic game 
The difference between simultaneous and sequential games is captured in the different representations discussed above. Often, normal form is used to represent simultaneous games, while extensive form is used to represent sequential ones. The transformation of extensive to normal form is one way, meaning that multiple extensive form games correspond to the same normal form. Consequently, notions of equilibrium for simultaneous games are insufficient for reasoning about sequential games; see subgame perfection.
Simultaneous games are games where both players move simultaneously, or if they do not move simultaneously, the later players are unaware of the earlier players' actions (making them effectively simultaneous). Sequential games (or dynamic games) are games where later players have some knowledge about earlier actions. This need not be perfect information about every action of earlier players; it might be very little knowledge. For instance, a player may know that an earlier player did not perform one particular action, while he does not know which of the other available actions the first player actually performed.
Simultaneous / Sequential
Constantsum games correspond to activities like theft and gambling, but not to the fundamental economic situation in which there are potential gains from trade. It is possible to transform any game into a (possibly asymmetric) zerosum game by adding a dummy player (often called "the board") whose losses compensate the players' net winnings.
Many games studied by game theorists (including the infamous prisoner's dilemma) are nonzerosum games, because the outcome has net results greater or less than zero. Informally, in nonzerosum games, a gain by one player does not necessarily correspond with a loss by another.
Zerosum games are a special case of constantsum games, in which choices by players can neither increase nor decrease the available resources. In zerosum games the total benefit to all players in the game, for every combination of strategies, always adds to zero (more informally, a player benefits only at the equal expense of others). Poker exemplifies a zerosum game (ignoring the possibility of the house's cut), because one wins exactly the amount one's opponents lose. Other zerosum games include matching pennies and most classical board games including Go and chess.
A  B  
A  –1, 1  3, –3 
B  0, 0  –2, 2 
A zerosum game 
Zerosum / Nonzerosum
Most commonly studied asymmetric games are games where there are not identical strategy sets for both players. For instance, the ultimatum game and similarly the dictator game have different strategies for each player. It is possible, however, for a game to have identical strategies for both players, yet be asymmetric. For example, the game pictured to the right is asymmetric despite having identical strategy sets for both players.
A symmetric game is a game where the payoffs for playing a particular strategy depend only on the other strategies employed, not on who is playing them. If the identities of the players can be changed without changing the payoff to the strategies, then a game is symmetric. Many of the commonly studied 2×2 games are symmetric. The standard representations of chicken, the prisoner's dilemma, and the stag hunt are all symmetric games. Some scholars would consider certain asymmetric games as examples of these games as well. However, the most common payoffs for each of these games are symmetric.
E  F  
E  1, 2  0, 0 
F  0, 0  1, 2 
An asymmetric game 
Symmetric / Asymmetric
Hybrid games contain cooperative and noncooperative elements. For instance, coalitions of players are formed in a cooperative game, but these play in a noncooperative fashion.
Of the two types of games, noncooperative games are able to model situations to the finest details, producing accurate results. Cooperative games focus on the game at large. Considerable efforts have been made to link the two approaches. The socalled Nashprogramme (Nash program is the research agenda for investigating on the one hand axiomatic bargaining solutions and on the other hand the equilibrium outcomes of strategic bargaining procedures)^{[34]} has already established many of the cooperative solutions as noncooperative equilibria.
Often it is assumed that communication among players is allowed in cooperative games, but not in noncooperative ones. However, this classification on two binary criteria has been questioned, and sometimes rejected (Harsanyi 1974).
A game is cooperative if the players are able to form binding commitments. For instance, the legal system requires them to adhere to their promises. In noncooperative games, this is not possible.
Cooperative / Noncooperative
Types of games
Some assumptions used in some parts of game theory have been challenged in philosophy; for example, psychological egoism states that rationality reduces to selfinterest—a claim debated among philosophers. (see Psychological egoism#Criticisms)
Other authors have attempted to use evolutionary game theory in order to explain the emergence of human attitudes about morality and corresponding animal behaviors. These authors look at several games including the prisoner's dilemma, stag hunt, and the Nash bargaining game as providing an explanation for the emergence of attitudes about morality (see, e.g., Skyrms (1996, 2004) and Sober and Wilson (1999)).
In ethics, some authors have attempted to pursue Thomas Hobbes' project of deriving morality from selfinterest. Since games like the prisoner's dilemma present an apparent conflict between morality and selfinterest, explaining why cooperation is required by selfinterest is an important component of this project. This general strategy is a component of the general social contract view in political philosophy (for examples, see Gauthier (1986) and Kavka (1986)).^{[33]}
Game theory has also challenged philosophers to think in terms of interactive epistemology: what it means for a collective to have common beliefs or knowledge, and what are the consequences of this knowledge for the social outcomes resulting from agents' interactions. Philosophers who have worked in this area include Bicchieri (1989, 1993),^{[30]} Skyrms (1990),^{[31]} and Stalnaker (1999).^{[32]}
Game theory has been put to several uses in philosophy. Responding to two papers by W.V.O. Quine (1960, 1967), Lewis (1969) used game theory to develop a philosophical account of convention. In so doing, he provided the first analysis of common knowledge and employed it in analyzing play in coordination games. In addition, he first suggested that one can understand meaning in terms of signaling games. This later suggestion has been pursued by several philosophers since Lewis (Skyrms (1996), Grim, Kokalis, and AlaiTafti et al. (2004)). Following Lewis (1969) gametheoretic account of conventions, Edna UllmannMargalit (1977) and Bicchieri (2006) have developed theories of social norms that define them as Nash equilibria that result from transforming a mixedmotive game into a coordination game.^{[28]}^{[29]}
Stag  Hare  
Stag  3, 3  0, 2 
Hare  2, 0  2, 2 
Stag hunt 
Philosophy
The emergence of the internet has motivated the development of algorithms for finding equilibria in games, markets, computational auctions, peertopeer systems, and security and information markets. Algorithmic game theory^{[25]} and within it algorithmic mechanism design^{[26]} combine computational algorithm design and analysis of complex systems with economic theory.^{[27]}
Separately, game theory has played a role in online algorithms. In particular, the kserver problem, which has in the past been referred to as games with moving costs and requestanswer games (Ben David, Borodin & Karp et al. 1994). Yao's principle is a gametheoretic technique for proving lower bounds on the computational complexity of randomized algorithms, especially online algorithms.
Game theory has come to play an increasingly important role in logic and in computer science. Several logical theories have a basis in game semantics. In addition, computer scientists have used games to model interactive computations. Also, game theory provides a theoretical basis to the field of multiagent systems.
Computer science and logic
The coefficient values depend heavily on the scope of the playing field; for example if the choice of whom to favor includes all genetic living things, not just all relatives, we assume the discrepancy between all humans only accounts for approximately 1% of the diversity in the playing field, a coefficient that was ½ in the smaller field becomes 0.995. Similarly if it is considered that information other than that of a genetic nature (e.g. epigenetics, religion, science, etc.) persisted through time the playing field becomes larger still, and the discrepancies smaller. [24] Evolutionary game theory explains this altruism with the idea of
All of these actions increase the overall fitness of a group, but occur at a cost to the individual. [24] One such phenomenon is known as
According to Maynard Smith, in the preface to Evolution and the Theory of Games, "paradoxically, it has turned out that game theory is more readily applied to biology than to the field of economic behaviour for which it was originally designed". Evolutionary game theory has been used to explain many seemingly incongruous phenomena in nature.^{[23]}
Biologists have used the game of chicken to analyze fighting behavior and territoriality.^{[22]}
Additionally, biologists have used Paul Ormerod's Butterfly Economics).
In biology, game theory has been used as a model to understand many different phenomena. It was first used to explain the evolution (and stability) of the approximate 1:1 sex ratios. (Fisher 1930) suggested that the 1:1 sex ratios are a result of evolutionary forces acting on individuals who could be seen as trying to maximize their number of grandchildren.
Unlike those in economics, the payoffs for games in biology are often interpreted as corresponding to fitness. In addition, the focus has been less on equilibria that correspond to a notion of rationality and more on ones that would be maintained by evolutionary forces. The best known equilibrium in biology is known as the evolutionarily stable strategy (ESS), first introduced in (Smith & Price 1973). Although its initial motivation did not involve any of the mental requirements of the Nash equilibrium, every ESS is a Nash equilibrium.
Hawk  Dove  
Hawk  20, 20  80, 40 
Dove  40, 80  60, 60 
The hawkdove game 
Biology
Game theory could also help predict nation's responses when there is a new rule or law to be applied to that nation. One example would be Peter John Wood's (2013) research when he looked into what nations could do to help reduce climate change. Wood thought this could be accomplished by making treaties with other nations to reduce green house gas emissions. However, he concluded that this idea could not work because it would create a prisoner's dilemma to the nations.^{[21]}
A gametheoretic explanation for democratic peace is that public and open debate in democracies send clear and reliable information regarding their intentions to other states. In contrast, it is difficult to know the intentions of nondemocratic leaders, what effect concessions will have, and if promises will be kept. Thus there will be mistrust and unwillingness to make concessions if at least one of the parties in a dispute is a nondemocracy (Levy & Razin 2003).
It has also been proposed that game theory explains the stability of any form of political government. Taking the simplest case of a monarchy, for example, the king, being only one person, does not and cannot maintain his authority by personally exercising physical control over all or even any significant number of his subjects. Sovereign control is instead explained by the recognition by each citizen that all other citizens expect each other to view the king (or other established government) as the person whose orders will be followed. Coordinating communication among citizens to replace the sovereign is effectively barred, since conspiracy to replace the sovereign is generally punishable as a crime. Thus, in a process that can be modeled by variants of the prisoner's dilemma, during periods of stability no citizen will find it rational to move to replace the sovereign, even if all the citizens know they would be better off if they were all to act collectively.^{[20]}
Early examples of game theory applied to political science are provided by Anthony Downs. In his book An Economic Theory of Democracy,(Downs 1957) he applies the Hotelling firm location model to the political process. In the Downsian model, political candidates commit to ideologies on a onedimensional policy space. Downs first shows how the political candidates will converge to the ideology preferred by the median voter if voters are fully informed, but then argues that voters choose to remain rationally ignorant which allows for candidate divergence.
The application of game theory to political science is focused in the overlapping areas of fair division, political economy, public choice, war bargaining, positive political theory, and social choice theory. In each of these areas, researchers have developed gametheoretic models in which the players are often voters, states, special interest groups, and politicians.
Political science
A prototypical paper on game theory in economics begins by presenting a game that is an abstraction of a particular economic situation. One or more solution concepts are chosen, and the author demonstrates which strategy sets in the presented game are equilibria of the appropriate type. Naturally one might wonder to what use this information should be put. Economists and business professors suggest two primary uses (noted above): descriptive and prescriptive.^{[4]}
The payoffs of the game are generally taken to represent the utility of individual players. Often in modeling situations the payoffs represent money, which presumably corresponds to an individual's utility. This assumption, however, can be faulty.^{[19]}
This research usually focuses on particular sets of strategies known as "solution concepts" or "equilibria" based on what is required by norms of (ideal) rationality. In noncooperative games, the most famous of these is the Nash equilibrium. A set of strategies is a Nash equilibrium if each represents a best response to the other strategies. So, if all the players are playing the strategies in a Nash equilibrium, they have no unilateral incentive to deviate, since their strategy is the best they can do given what others are doing.^{[17]}^{[18]}
^{[16]}^{[15]}.political economy and [14]