An introduction to game theory that offers not only theoretical tools but also the intuition and behavioral insights to apply these tools to real-world situations.

This introductory text on game theory provides students with both the theoretical tools to analyze situations through the logic of game theory and the intuition and behavioral insights to apply these tools to real-world situations. It is unique among game theory texts in offering a clear, formal introduction to standard game theory while incorporating evidence from experimental data and introducing recent behavioral models. Students will not only learn about incentives, how to represent situations as games, and what agents “should” do in these situations, but they will also be presented with evidence that either confirms the theoretical assumptions or suggests a way in which the theory might be updated.

Features:
  •  Each chapter begins with a motivating example that can be run as an experiment and ends with a discussion of the behavior in the example.
  •  Parts I–IV cover the fundamental “nuts and bolts” of any introductory game theory course, including the theory of games, simple games with simultaneous decision making by players, sequential move games, and incomplete information in simultaneous and sequential move games.
  •  Parts V–VII apply the tools developed in previous sections to bargaining, cooperative game theory, market design, social dilemmas, and social choice and voting.
  •  Part VIII offers a more in-depth discussion of behavioral game theory models including evolutionary and psychological game theory.
  •  Supplemental material on the book’s website include solutions to end-of-chapter exercises, a manual for running each chapter’s experimental games using pencil and paper, and the oTree codes for running the games online.

Jeffrey Carpenter is James Jermain Professor of Political Economy at Middlebury College. Andrea Robbett is Associate Professor in the Economics Department at Middlebury College.

Preface xvii
Acknowledgments xxi
I Introduction to the Theory of Games 
1 Games of Strategy 3
2 Game Representations 19
II Solving Games 
3 Dominated Strategies 41
4 Equilibrium 65
5 Mixed Strategies 85
6 Equilibrium in Nonmatrix Games 107
7 Equilibrium Selection 137
III Analyzing Sequential-Move Games
8 Subgame Perfection 161
9 Finitely Repeated Games 183
10 Infinitely Repeated Games 205
IV Incomplete Information
11 Simultaneous Games of Incomplete Information 225
12 Signaling: Sequential Games of Incomplete Information 245
13 Auctions 277
V Bargaining and Cooperative Game Theory 
14 Non-cooperative Bargaining 307
15 Cooperative Bargaining 331
16 Cooperative Game Theory 347
17 Matching Market Design 371
VI Social Dilemmas
18 Social Dilemmas 397
19 Public Goods 411
20 Common Pool Resources 427
VII Social Choice and Voting 
21 Social Choice 453
22 The Paradox of Voting 491
23 Voting with Private Information 511
VIII Behavioral Extensions of Standard Theory 
24 Belief-Based Learning 533
25 Evolutionary Game Theory 545
26 Quantal Response Equilibrium 575
27 Level-k Reasoning 597
28 Psychological Game Theory 619
Appendix 645
References 661
Index 679