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Consequences and Applications of Game Theory

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Notes

Successes and Failures

Problems for applications of game theory are easy to find Hargreaves-Heap & Varoufakis, 2004 is particularly full of them, but any recent-ish textbook will cover some.

What’s puzzling about game theory is that, despite the problems, there are many cases where it is successfully used to explain things.

This section introduces one case where game theory has been successfully used to explain behaviour (Sinervo & Lively, 1996). There are many others, including:

If studying game theory, it would be a good idea to consider how it has been applied in a domain of interest to you.1

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Glossary

dominance : An action (or strategy) _strictly dominates_ another if it ensures better outcomes for its player no matter what other players choose. (See also weak dominance.)
game theory : 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).
strict dominance : In game theory, one action _strictly dominates_ another action if the first action guarantees its player higher payoffs than the second action regardless of what other players choose to do. (See Definition 59.2 in Osborne & Rubinstein, 1994, p. 59 for a more general definition.)
weak dominance : In game theory, one action _weakly dominates_ another action if the first action guarantees its player payoffs at least as good as the other action and potentially better than it regardless of what other players choose to do. (Contrast strict dominance.)

References

Dixit, A., Skeath, S., & Reiley, D. (2014). Games of strategy. New York: W. W. Norton; Company.
Hansen, A. J. (1986). Fighting Behavior in Bald Eagles: A Test of Game Theory. Ecology, 67(3), 787–797. https://doi.org/10.2307/1937701
Hargreaves-Heap, S., & Varoufakis, Y. (2004). Game theory: A critical introduction. London: Routledge. Retrieved from http://webcat.warwick.ac.uk/record=b2587142~S1
Madani, K. (2010). Game theory and water resources. Journal of Hydrology, 381(3), 225–238. https://doi.org/10.1016/j.jhydrol.2009.11.045
McAdams, R. H. (2008). Beyond the Prisoners’ Dilemma: Coordination, Game Theory, and Law. Southern California Law Review, 82(2), 209–258.
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.
Rasmusen, E. (2007). Games and information: An introduction to game theory (4th ed). Malden, MA ; Oxford: Blackwell Pub.
Roy, S., Ellis, C., Shiva, S., Dasgupta, D., Shandilya, V., & Wu, Q. (2010). A Survey of Game Theory as Applied to Network Security. In 2010 43rd Hawaii International Conference on System Sciences (pp. 1–10). https://doi.org/10.1109/HICSS.2010.35
Sinervo, B., & Lively, C. M. (1996). The rockpaperscissors game and the evolution of alternative male strategies. Nature, 380(6571), 240–243. https://doi.org/10.1038/380240a0
Skyrms, B. (2000). Game theory, rationality and evolution of the social contract. Journal of Consciousness Studies, 7(1–2), 269–284.
Tadelis, S. (2013). Game theory: An introduction. Princeton: Princeton University Press.

Endnotes

  1. I am not particularly recommending the sources cited here. Please share with me any good sources you find.