INTRODUCTION

attempts to mathematically capture

behavior in strategic situations, in which an

individual's success in making choices depends

on the choices of others.

GAME THEORYECONOMISTS :

THEORY OF SOCIAL SITUATIONSPSYCHOLOGISTS :

?HOW GROUPS OF PEOPLE INTERACT

1 - Players

2- Actions & Strategies

3- Rules

3-1- Sequence 3-2- Information Structure3-3- Outcomes3-4- Pay-Offs

TYPES OF GAMES

Games of SkillGames of

Strategy

Games of

Chance

Two - Person

Multi - Person

Risk

Uncertainty

GameCooperative Players’ interests coincide

Non-cooperative Game(Zero-SumPlayers’ interests are conflicting

Hybrid Game(Players’ interests are simultaneously opposed & coincident

Decision Theory- Single player against nature

- How best acquire information before making decision

General Equilibrium Theory- Deals with trade & production

- Used in macroeconomic analysis

Mechanism Design Theorytypes of rules- Asks about the consequences of different

- Use Meta game type (development of the rules for another game)

APPLICATION IN MANAGEMENT

Industrial Organization Strategies

Corporate Finance

Mechanism & Auction Design

GAME FEATURES

1- Simple representation of a variety

of important situations.

2- How an intelligent individual should behave!

Conflict between the pursuit of individual goals

and the common good, is at the heart of many games .

3- Game changes in a very significant way if

the game is repeated

<< Game theorists have provided a number of theories >>

If the game is repeated often enough, the suspects

ought to cooperate

Contribute to

the common

good

Behave

selfishly

The difference between genius and stupidity is

that genius has its limits!