In this part of the course we begin discussion of decision theory (this week) game theory (next week). We will eventually relate these to philosophical issues and psychological discovieres about individual and joint action.
This lecture depends on you having studied some sections from a previous lecture:
For the minimum course of study, consider only these sections:
Alternatively, if you have more time but not enough for everything, skip Dual Process Theory Opposes Decision Theory? and study the other sections.
There is a bit more than usual to cover this week, which will be hard if this is your first encounter with decision theory.
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: I use ‘decision theory’ for the theory elaborated by Jeffrey (1983). Variants are variously called ‘expected utility theory’ (Hargreaves-Heap & Varoufakis, 2004), ‘revealed preference theory’ (Sen, 1973) and ‘the theory of rational choice’ (Sugden, 1991). As the differences between variants are not important for our purposes, the term can be used for any of core formal parts of the standard approaches based on Ramsey (1931) and Savage (1972).
: This term is used for any version of the theory based on the ideas of Neumann et al. (1953) and presented in any of the standard textbooks including. Hargreaves-Heap & Varoufakis (2004); Osborne & Rubinstein (1994); Tadelis (2013); Rasmusen (2007).
Hargreaves-Heap, S., & Varoufakis, Y. (2004). Game theory: A critical introduction
. London: Routledge. Retrieved from http://webcat.warwick.ac.uk/record=b2587142~S1
Jeffrey, R. C. (1983). The logic of decision, second edition
. Chicago: University of Chicago Press.
Neumann, J. von, Morgenstern, O., Rubinstein, A., & Kuhn, H. W. (1953). Theory of Games and Economic Behavior
. Princeton, N.J. ; Woodstock: Princeton University Press.
Osborne, M. J., & Rubinstein, A. (1994). A course in game theory
. MIT press.
Ramsey, F. (1931). Truth and probability. In R. Braithwaite (Ed.), The foundations of mathematics and other logical essays
. London: Routledge.
Rasmusen, E. (2007). Games and information: An introduction to game theory
(4th ed). Malden, MA ; Oxford: Blackwell Pub.
Savage, L. J. (1972). The foundations of statistics
(2nd rev. ed). New York: Dover Publications.
Sen, A. (1973). Behaviour and the Concept of Preference. Economica
(159), 241–259. https://doi.org/10.2307/2552796
Sugden, R. (1991). Rational Choice: A Survey of Contributions from Economics and Philosophy. The Economic Journal
(407), 751–785. https://doi.org/10.2307/2233854
Tadelis, S. (2013). Game theory: An introduction
. Princeton: Princeton University Press.