Definition of “Game Theory”
- “… the study of mathematical models of conflict and cooperation between intelligent rational decison-makers.”()
- originated as sub-fields of microeconomics and applied mathematics
Definition of “Game”
- “In the language of game theory, a game refers to any social situation involving two or more individuals. The individuals involved in a game may be called the players.”()
- Assumption on players
- rational: A player is called as being rational, if he/she makes decisions consistently in pursuit of his own objectives(, which is maximization of his utility frequently).
- intelligent: A player is called as being intelligent, if he/she knows everything that we know about the game and he can make any inferences about the situation that we can make.
Applications of Game Theory
- Industrial organization (and their behaviors): analyzing cooperations(e.g. cartel) and competitions between firms
- Auction theory: in terms of auctioneer and auction participants. e.g. Google auction, Yahoo auction, Soderby`s, ebay and so on.
- Contract theory: Employer vs. Employee / Consumer vs. Producer
- Evolutionary biology
- Political science: international relationship, political parties
- Public policy: Tragedy of commons, welfare policy design
List of Games
Why Do People Cooperate?
1. Kinship selection
- When the sacrificing behavior of an agent can contribute to the spreading of its genes more than the cost for itself, it would choose to do. (, )
2. Indirect reciprocity
- If each player decides whether to help someone or not based on the recipient’s image accumulated through previous altruistic behaviors, altruistic behavior becomes dominant. ()
3. Direct reciprocity
- Repeated PD game
- Tit-For-Tat: Select the previous strategy of your partner ()
- win-stay, lose-shift: If your previous strategy was dominant toward the one of your partner, keep it. Otherwise, change it. ()
4. Costly signaling()
- Group members have a personal characteristic, which we will call quality, that can either be high or low.
- Each individual has occasion to enter into a profitable alliance (e.g. mating or political coalition) with any one of the other group members.
5. Altruistic punishment ()
- If individuals can punish free riders in their group, although the punishment is costly and yields no material gain to the punisher, the cooperation flourishes.
6. Evolution of Social Network ()
– If cooperator pay the required cost, all his neighbors in a network would get benefit.
– In every turn, one randomly chosen player become dead.
– The tendency of new player for that position is decided depending on the sum of accumulated benefits of all neighbors.
7. Static Network ()
– If a social network is static, cooperative strategy becomes more stable.
– “We find that people cooperate at high stable levels, as long as the benefits created by cooperation are larger than the number of neighbors in the network.”
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