Applications and Limits of Game Theory
This recording is also available on stream (no ads; search enabled). Or you can view just the slides (no audio or video). You should not watch the recording this year, it’s all happening live (advice).
If the video isn’t working you could also watch it on youtube. Or you can view just the slides (no audio or video). You should not watch the recording this year, it’s all happening live (advice).
If the slides are not working, or you prefer them full screen, please try this link.
Problems for applications of game theory are easy to find. Hargreaves-Heap & Varoufakis, 2004 is particularly full of them, but any recent-ish textbook will cover some.
What’s puzzling about game theory is that, despite the problems, there are many cases where it is successfully used to explain things.
This section introduces one case where game theory has been successfully used to explain behaviour (Sinervo & Lively, 1996). There are many others, including:
- law: inequality, culture and power (McAdams, 2008)
- network security (Roy et al., 2010)
- evolution of social contract (Skyrms, 2000)
- distribution of water resources (Madani, 2010)
- the tragedy of the commons Tadelis (2013, p. §5.2.2)
- foraging behaviours (Hansen, 1986)
If studying game theory, it would be a good idea to consider how it has been applied in a domain of interest to you.
Why is game theory so useful given that problems are so easy to find?
For our purposes, two limits of game theory are particularly important:
- in Hi-Lo, it is impossible using vanilla game theory to show that choosing Hi is more rational than choosing Lo; and
- in the Prisoners’ Dilemma[2:1], game theory implies that it is not rational to cooperate even though both agents’ doing so secures them the highest gain.
Ask a Question
Your question will normally be answered in the question session of the next lecture.
More information about asking questions.
I am not particularly recommending the sources cited here. Please share with me any good sources you find. ↩︎
These games are specified in the Appendix: Index of Games ↩︎ ↩︎