Games of Strategy: Basic principles
Game Theory // Fall 2025
marcio.santetti@emerson.edu
A bit of History
A bit of History
A bit of History
A game as any interaction between agents that is governed by a set of rules specifying the possible moves for each participant and a set of outcomes for each possible combination of moves.
A bit of History
Nobel prizes in Economics:
1972, 1994, 2005, 2007, 2009, 2012, 2014, 2016, 2017, 2020.
More formally
More formally
In short, games are formal descriptions of strategic settings.
For our purposes, strategic settings → interdependence.
- What you do affects my outcomes, and what I do affects your outcomes.
Most of the time, outcomes do not imply winning or losing.
More formally
We will learn a mathematically precise and logically consistent structure.
To start, 5 elements:
A list of players;
A complete description of what the players can do (i.e., their actions);
A description of what the players know when they act;
A specification of how the players’ actions lead to outcomes;
A specification of the players’ preferences over outcomes (i.e., the payoffs).
More fomally
Noncooperative vs. cooperative games
Individual actions vs. Contractual relations
More fomally
Noncooperative games:
Extensive form;
Normal (strategic) form.