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Using fascinating examples from a range of disciplines, this textbook provides social science, philosophy and economics students with an engaging introduction to the tools they need to understand and predict strategic interactions. Beginning with an introduction to the most famous games, the book uses clear, jargon-free language and accessible maths as it guides the reader through whole games with full, worked-through examples. End-of-chapter exercises help to consolidate understanding along the way. With an applied approach that draws upon real-life case-studies, this book highlights the insights that game theory can offer each situation. It is an ideal textbook for students approaching game theory from various fields across the social sciences, and for curious general readers who are looking for a thorough introduction to this intriguing subject.



Table of Contents:
Chapter 1. The most famous games.- 1.1 The coordination game.- 1.2 Choice of standards.- 1.3 The battle of the sexes.- 1.4 The chicken game.- 1.5 The prisoners´ dilemma.- 1.6 Matching pennies.- 1.7 The ultimatum game.- Chapter 2. Building the theory for simultaneous games.- 2.1 The normal form game.- 2.2 Towards a solution.- 2.3 Some propositions on maximin strategies, rationalizable strategies and Nash equilibria.- 2.4 Finding the Nash equilibria.- 2.5 Complications in finding the Nash equilibria.- 2.6 The payoffs of the game and the mixed strategies.- Chapter 3. Static games.- 3.1 Fiscal battles.- 3.2 The median voter.- 3.3 The advantage of being indifferent.- 3.4 The broken windows theory.- 3.5 The independence of Sylvania.- 3.6 Cournot oligopoly.- 3.7 Bertrand oligopoly.- 3.8 Keeping up with the Joneses.- Chapter 4. Dynamic games.- 4.1 The extensive form. Backwards induction.- 4.2 The prisoners´ dilemma with a previous contract.- 4.3 Subgame perfect Nash equilibrium.- 4.4 How to be credible (1): Elimination of strategies. Odysseus and the sirens.- 4.5 How to be credible (2): Acquire costly compromises. Who enters?.- 4.6 How to be credible (3): Give up control. Separation of powers.- 4.7 The consequences of not being credible. The health care game.- 4.8 The payment of the debt.- Chapter 5. Voting.- 5.1 Sincere and strategic voting.- 5.2 The manipulation of the agenda.- 5.3 Condorcet´s paradox.- 5.4 Referendum with minimum participation.- 5.5 The Borda count.- 5.6 Arrow´s theorem.- 5.7 The theorems by Gibbard-Satterthwaite and May.- 5.8 The median voter theorem.- 5.9 I´ll scratch your back and you´ll scratch mine.- 5.10 How to know the truth. The Groves-Clarke´s mechanism.- 5.11 Do we know what do the people want?.- 5.12 The discursive dilemma.- 5.13 A referendum in Catalonia.- Chapter 6. Negotiation games.- 6.1 The model of offers and counteroffers.- 6.2 Impatience.- 6.3 Risk aversion.- 6.4 Negotiating with fanatics.- 6.5 Some discussion.- 6.6 An actual case: the hijacking of the Alakrana.- 6.7 The Coase theorem.- 6.8 When not to apply the Coase theorem.- Chapter 7. Repeated games.- 7.1 The Christmas truce.- 7.2 A game repeated twice.- 7.3 Cooperation in the infinite and indefinite repetitions.- 7.4 Some technical details.- 7.5 Other strategies in the repeated game.- 7.6 The cooperation in the prisoners´ dilemma repeated finitely many times.- 7.7 What experiments say.- 7.8 What the empirical data say.- 7.9 Altruism, reciprocity and evolution.- 7.10 Not a zero-sum game.- 7.11 Axelrod´s tournament.- Chapter 8. Agency problems: adverse selection.- 8.1 The agency problem.- 8.2 The information sets.- 8.3 If you didn´t have anything to hide you´d show me your e-mails.- 8.4 Adverse selection in a first agency problem.- 8.5 Adverse selection and public health systems.- 8.6 Other examples of adverse selection.- 8.7 Other types of adverse selection.- 8.8 Competition reveals information: When the principal has information about the agent.- 8.9 On Rawls´ original position and the ex-ante criterion.- Chapter 9. Agency problems: signaling and moral hazard.- 9.1 Signaling with a discrete variable.- 9.2 The empirical evidence of education as a signal.- 9.3 Signaling with a continuous variable and discrimination in the labor market.- 9.4 Moral hazard: Fixed payment or payment by performance?.- 9.5 Moral hazard: Copayment, yes or no?.- 9.6 Moral hazard: Work with teams and cooperatives.- Chapter 10. Seven applications of Game Theory.- 10.1 The battle of the Bismarck Sea.- 10.2 The nuclear war.- 10.3 You cannot use information without revealing it.- 10.4 You should bluff from time to time.- 10.5 There may not be weapons of mass destruction: should we still attack?.- 10.6 Is free trade a prisoners´ dilemma?.- 10.7 Negotiations between Greece and the Troika.- Chapter 11. Seven more applications.- 11.1 The minority language.- 11.2 Pascal´s Wager.- 11.3 The surprise exam paradox.- 11.4 The sentence as deterrence.- 11.5 Solidarity versus charity.- 11.6 Single round versus runoff elections.- 11.7 How to end with infractions.- Chapter 12. Dynamics.- 12.1 Evolutionary dynamics: The hawk-dove game.- 12.2 Imitation dynamics: A segregation model.- 12.3 Best-reply dynamics: The emergence of language.- 12.4 No weakly dominated strategies dynamics: Self-inflicted injuries.- 12.5 Adaptive dynamics: Voluntary contribution to the provision of public goods.- Chapter 13. Limited rationality and behavioral economics.- 13.1 Preferences changing with time: which ones deserve priority?.- 13.2 Time inconsistency and energy saving.- 13.3 Irrationality due to the complexity of the election.- 13.4 Irrationality due to overconfidence.- 13.5 The age of majority.- 13.6 Indoctrination.- 13.7 Nudging: when to let others influence you.- 13.8 On other irrationalities that are not so irrational.- 13.9 Towards a behavioral theory.- Chapter 14. Power indices.- 14.1 Cooperative and majority games.- 14.2 Power indices in majority games.- 14.3 Application of power indices to three parliaments.- 14.4 Games with many quotas.- 14.5 The distribution of power in the EU after Brexit.- 14.6 Power indices with abstention.