Introducing Game Theory: A Graphic Guide (Graphic Guides)

by Ivan Pastine

To avoid future punishment, players may choose to be cooperative.

Therefore, we can be pretty sure that this is not yet an approach the major superpowers have taken.

Of course, a firm has every incentive to claim that its product is of high quality, whether it is or not. So, direct statements by the firm have no value.

Through self-selection, the warranty allows a high-quality product firm to differentiate itself from a low-quality product firm.

But this works only if the members of the community know that they have shared beliefs as a basis for their interaction. Since membership of the community provides some material benefits, non-believers have an incentive to pretend to be true believers.

Every person on the committee has transitive preferences and votes sincerely. But when acting as a group the committee’s preferences are non-transitive – whatever it chooses, the group will always think that another option is better.

Arrow’s Impossibility Theorem makes a lot of the strange behaviour we see in committee meetings and in parliaments more understandable. For instance, in committee work we frequently see the same issue coming up over and over again.