Strategic Games

Lecturer: Krzysztof R. Apt

The aim of this course is to introduce the main concepts concerned with strategic games (sometimes called non-cooperative games) and illustrate them by an analysis of various example games.

Strategic games deal with the analysis of interaction between rational players, where rationality is understood as utility maximization. In such games the players take their actions simultaneously and the utility (payoff) for each player depends on the resulting joint action. The course will introduce the basic concepts, such as pure and mixed strategies, best response, Nash equilibrium, social optimum, and strictly and weakly dominated strategies.

We shall discuss such well-known examples as the prisoner's dilemma, tragedy of the commons, beauty contest games, and analyze some well-known examples of strategic games studied in the economics: Cournot competition, Bernard competition and the location game. Other classes of games will include congestion games and social network games. To analyze such games we shall introduce the concepts of potential, price of anarchy, price of stability, and the selfishness level.

Finally, we shall introduce pre-Bayesian games that will allow us to consider mechanism design, the aim of which is to arrange the economic interactions in such a way that when everyone behaves in a self-interested manner, the result is satisfactory for everybody.

Some course slides: liverpool11-sli  lorentz-slide