Introducing Game Theory Quotes

“However, if there is common knowledge of rationality, you know that others will not stop at the first step, so you can continue this iterative reasoning forever – a process of reasoning that involves repetition of the same process, taking the result from one round as a starting point for the next.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“people’s actions are influenced by their expectations of others’ actions.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“In all walks of life people make decisions where their information is either imperfect or incomplete, or both. This has important implications for the strategic interaction between players, especially if one side is better informed than the other.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Due to the difficulty of coming up with a commitment device, the poor stay poor, while the rich get richer.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“One feature of complex board games like chess is that the more skilled the players are, the more frequently the game ends with a draw.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Game Theory for Applied Economists, and is published by Princeton University Press.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“In the long run, evolutionary forces will cause the proportion of hawk-types in the population to tend toward 5/6 and the proportion of dove-types to tend toward 1/6. These exact proportions are due to the particular numbers we used in the payoff matrix. But whenever the cost of conflict is higher than the value of the prize, evolutionary forces will drive the population to a point where both hawks and doves coexist.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“But some games have more than one evolutionarily stable equilibrium. In these games, evolutionary forces will restore the equilibrium proportions if there are small changes to the population. But large changes in the population composition can cause evolutionary forces to bring the population to another equilibrium altogether.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“In environments with multiple equilibria, players may coordinate their expectation on one equilibrium using social norms.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“One way out of the free-rider problem is to change the payoffs in the payoff matrix”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“International cooperation on environmental protection is like the Roommate Game writ large. Each country prefers to remain passive while the others adopt costly abatement technologies to reduce CO2 emissions. A way out of this free-rider problem is to sign an international treaty”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“There is a Pareto improvement in the outcome of the Roommate Game due to moral values; players’ equilibrium payoffs go up from 10 to 14.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“individual incentives encourage conflict.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“The Nash equilibrium outcome in the nuclear arms race is not Pareto efficient because both countries would be better off if neither engaged in nuclear build-up. However, as Dresher and Flood argued, this couldn’t be an equilibrium. If the USA were to have stopped nuclear build-up, the USSR would have continued building its own arsenal to capture the “super-power” position. And it would not have been rational for the USA to stop nuclear build-up in the first place.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“The Guessing Game and Keynes’ Beauty Contest can explain the interesting fact that in financial markets we observe bubbles – excessively inflated prices – even if all participants are rational. This is because of a lack of common knowledge of rationality.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Human behaviour is probably better approximated by bounded rationality. That is, human rationality is limited by the tractability of the decision problem (how easy it is to manage), the cognitive limitations of our minds, the time available in which to make the decision, and how important the decision is to us.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“A classic example is Keynes’ Beauty Contest, in which English economist John Maynard Keynes (1883–1946) likens investment in financial markets to a newspaper competition in which readers have to choose the “prettiest face”; the readers who choose the most frequently chosen face win.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Rationality refers to players understanding the setup of the game and exercising the ability to reason.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“many situations, there are benefits to cooperation but elements of conflict also exist.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Game theory allows us to understand how people act in situations where they are interconnected.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“avoid”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“(or normal) form of the game. The strategic form”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Game theory usually assumes rationality and common knowledge of rationality. Rationality refers to players understanding the setup of the game and exercising the ability to reason.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide

“Game theory is a set of tools used to help analyze situations where an individual’s best course of action depends on what others do or are expected to do. Game theory allows us to understand how people act in situations where they are interconnected.”
― Ivan Pastine, Introducing Game Theory: A Graphic Guide