Game Theory for Applied Economists

Game Theory for Applied Economists

Paperback

By (author) R. Gibbons

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  • Publisher: Princeton University Press
  • Format: Paperback | 288 pages
  • Dimensions: 157mm x 241mm x 18mm | 136g
  • Publication date: 2 August 1992
  • Publication City/Country: New Jersey
  • ISBN 10: 0691003955
  • ISBN 13: 9780691003955
  • Edition statement: Reprint
  • Sales rank: 152,987

Product description

This book introduces one of the most powerful tools of modern economics to a wide audience: those who will later construct or consume game-theoretic models. Robert Gibbons addresses scholars in applied fields within economics who want a serious and thorough discussion of game theory but who may have found other works overly abstract. Gibbons emphasizes the economic applications of the theory at least as much as the pure theory itself; formal arguments about abstract games play a minor role. The applications illustrate the process of model building--of translating an informal description of a multi-person decision situation into a formal game-theoretic problem to be analyzed. Also, the variety of applications shows that similar issues arise in different areas of economics, and that the same game-theoretic tools can be applied in each setting. In order to emphasize the broad potential scope of the theory, conventional applications from industrial organization have been largely replaced by applications from labor, macro, and other applied fields in economics. The book covers four classes of games, and four corresponding notions of equilibrium: static games of complete information and Nash equilibrium, dynamic games of complete information and subgame-perfect Nash equilibrium, static games of incomplete information and Bayesian Nash equilibrium, and dynamic games of incomplete information and perfect Bayesian equilibrium.

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Review quote

"Lucid and detailed introduction to game theory in an explicitly economic context."--Cooperative Economic News Service

Table of contents

1Static Games of Complete Information 1.1Basic Theory: Narmal-Form Games and Nash Equilibrium 1.1.ANormal-Form Representation of Games 1.1.BIterated Elimination of Strictly Dominated Strategies 1.1.CMotivation and Definition of Nash Equilibriuin 1.2Applications 1.2.ACournot Model of Duopoly 1.2.BBertrand Model of Duopoly 1.2.CFinal-Offer Arbitration 1.2.DThe Problem of the Commons 1.3Advanced Theory: Mixed Strategies and Existence of Equilibriutn 1.3.AMixed Strategies 1.3.BExistence of Nash Equilibrium 2Dynamic Games of Complete Information 2.1Dynamic Games of Complete and Perfect Information 2.1.ATheory: Backwards Induction 2.1.BStackelberg Model of Duopoly 2.1.CWages and Employment in a Unionized Firm 2.1.DSequential Bargaining 2.2Two-Stage Games of Complete but Imperfect Information 2.2.ATheory: Subgame Perfection 2.2.BBank Runs 2.2.CTariffs and Imperfect International Competition 2.2.DTournaments 2.3Repeated Games 2.3.ATheory: Two-Stage Repeated Games 2.3.BTheory: Infinitely Repeated Games 2.3.CCollusion between Cournot Duopolists 2.3.DEfficiency Wages 2.3.ETime-Consistent Monetary Policy 2.4Dynamic Games of Complete but Imperfect Information 2.4.AExtensive-Form Representation of Games 2.4.BSubgame-Perfect Nash Equilibriuin 3Static Games of Incomplete Information 3.1Theory: Static Bayesian Ganies and Bayesian Nash Equilibrium 3.1.AAn Example: Cournot Competition under Asymmetric Information 3.1.BNormal-Form Representation of Static Bayesian Games 3.1.CDefinition of Bayesian Nash Equilibrium 3.2Applications 3.2.AMixed Strategies Revisited 3.2.BAn Auction 3.2.CA Double Auction 3.3The Revelation Principle 4Dynamic Games of Incomplete Information 4.1Introduction to Perfect Bayesian Equilibrium 4.2Signaling Games 4.2.APerfect Bayesian Equilibrium in Signaling Games 4.2.BJob-Market Signaling 4.2.CCorporate Investment and Capital Structure 4.2.DMonetary Policy 4.3Other Applications of Perfect Bayesian Equilibrium 4.3.ACheap-Talk Games 4.3.BSequential Bargaining under Asymmetric Information 4.3.CReputation in the Finitely Repeated Prisoners' Dilemnia 4.4Refinements of Perfect Bayesian Equilibrium Index