Book Information

Games and Information

An Introduction to Game Theory

Fourth Edition

By: Eric Rasmusen

Reviews

Praise for the 3rd edition "Rasmusen's Games and Information provides wonderful coverage of the basics of game theory and information economics. His consistent style of presenting the theor...

Description

Written in a crisp and approachable style, Games and Information uses simple modeling techniques and straightforward explanations to provide students with an understanding of game theory and information economics.

• Written for introductory courses seeking a little rigor.
• The 4th edition brings the material fully up-to-date and includes new end-of-chapter problems and classroom projects, as well as a math appendix.
• Accompanied by a comprehensive website featuring solutions to problems and teaching notes.

TopTable of Contents

List of Figures
List of Tables
List of Games
Preface
Contents and Purpose
Changes in the Second Edition (1994)
Changes in the Third Edition (2001)
Changes in the Fourth Edition (2006)
Using the Book
The Level of Mathematics
Other Books
Contact Information
Acknowledgements
Introduction
History
Game Theory's Method
Exemplifying Theory
This Book's Style
Notes
PART 1: GAME THEORY
1. The Rules of the Game
Definitions
Dominated and Dominant Strategies: The Prisoner's Dilemma
Iterated Dominance: The Battle of the Bismarck Sea
Nash Equilibrium: Boxed Pigs, The Battle of the Sexes and Ranked Coordination
Focal Points
Notes
Problems
Classroom Game
2. Information
The Strategic and Extensive Forms of a Game
Information Sets
Perfect, Certain, Symmetric, and Complete Information
The Harsanyi Transformation and Bayesian Games
Example: The Png Settlement Game
Notes
Problems
Classroom Game
3. Mixed and Continuous Strategies
Mixed Strategies: The Welfare Game
The Payoff-equating Method and Games of Timing
Mixed Strategies with General Parameters and N Players: The Civic Duty Game
Randomizing is not Always Mixing: The Auditing Game
Continuous Strategies: The Cournot Game
Continuous Strategies: The Bertrand Game, Strategic Complements, and Strategic
Substitutes
Existence of Equilibrium
Notes
Problems
Classroom Game
4. Dynamic Games with Symmetric Information
Subgame Perfectness
An Example of Perfectness: Entry Deterrence I
Credible Threats, Sunk Costs, and the Open-Set Problem in the Game of Nuisance Suits
Recoordination to Pareto-dominant Equilibria in Subgames: Pareto Perfection
Notes
Problems
Classroom Game
5. Reputation and Repeated Games with Symmetric Information
Finitely Repeated Games and the Chainstore Paradox
Infinitely Repeated Games, Minimax Punishments, and the Folk Theorem
Reputation: The One-sided Prisoner's Dilemma
Product Quality in an Infinitely Repeated Game
Markov Equilibria and Overlapping Generations: Customer Switching Costs
Evolutionary Equilibrium: The Hawk-Dove Game
Notes
Problems
Classroom Game
6. Dynamic Games with Incomplete Information
Perfect Bayesian Equilibrium: Entry Deterrence II and III
Refining Perfect Bayesian Equilibrium in the Entry Deterrence and PhD Admissions Games
The Importance of Common Knowledge: Entry Deterrence IV and V
Incomplete Information in the Repeated Prisoner's Dilemma: The Gang of Four Model
The Axelrod Tournament
Credit and the Age of the Firm: The Diamond Model
Notes
Problems
Classroom Game
PART 2: ASYMMETRIC INFORMATION
7. Moral Hazard: Hidden Actions
Categories of Asymmetric Information Models
A Principal-agent Model: The Production Game
The Incentive Compatibility and Participation Constraints
Optimal Contracts: The Broadway Game
Notes
Problems
Classroom Game
8. Further Topics in Moral Hazard
Efficiency Wages
Tournaments
Institutions and Agency Problems
Renegotiation: The Repossession Game
State-space Diagrams: Insurance Games I and II
Joint Production by Many Agents: The Holmstrom Teams Model
The Multitask Agency Problem
Notes
Problems
Classroom Game
9. Adverse Selection
Introduction: Production Game VI
Adverse Selection under Certainty: Lemons I and II
Heterogeneous Tastes: Lemons III and IV
Adverse Selection under Uncertainty: Insurance Game III
Market Microstructure
A Variety of Applications
Adverse Selection and Moral Hazard Combined: Production Game VII
Notes
Problems
Classroom Game
10. Mechanism Design and Postcontractual Hidden Knowledge
Mechanisms, Unravelling, Cross Checking, and the Revelation Principle
Myerson Mechanism Design
An Example of Postcontractual Hidden Knowledge: The Salesman Game
The Groves Mechanism
Price Discrimination
Rate-of-return Regulation and Government Procurement
Notes
Problems
Classroom Game
11. Signalling
The Informed Player Moves First: Signalling
Variants on the Signalling Model of Education
General Comments on Signalling in Education
The Informed Player Moves Second: Screening
Two Signals: The Game of Underpricing New Stock Issues
Signal Jamming and Limit Pricing
Countersignalling
Notes
Problems
Classroom Game
PART 3: APPLICATIONS
12. Bargaining
The Basic Bargaining Problem: Splitting a Pie
The Nash Bargaining Solution
Alternating Offers over Finite Time
Alternating Offers over Infinite Time
Incomplete Information
Setting Up a Way to Bargain: The Myerson-Satterthwaite Mechanism
Notes
Problems
Classroom Game
13. Auctions
Values Private and Common, Continuous and Discrete
Optimal Strategies under Different Rules in Private-value Auctions
Revenue Equivalence, Risk Aversion, and Uncertainty
Reserve Prices and the Marginal Revenue Approach
Common-value Auctions and the Winner's Curse
Asymmetric Equilibria, Affiliation, and Linkage: The Wallet Game
Notes
Problems
Classroom Game
14. Pricing
Quantities as Strategies: Cournot Equilibrium Revisited
Capacity Constraints: The Edgeworth Paradox
Location Models
Comparative Statics and Supermodular Games
Vertical Differentiation
Durable Monopoly
Notes
Problems
Classroom Game
Mathematical Appendix
Notation
The Greek Alphabet
Glossary
Formulas and Functions
Probability Distributions
Supermodularity
Fixed Point Theorems
Genericity
Discounting
Risk
References and Name Index
Subject Index

TopAbout the Author

Eric Rasmusen is the Dan R. and Catherine M. Dalton Professor of Business Economics and Public Policy at Indiana University in Bloomington. In addition to Games and Information, he has edited Readings in Games and Information (Blackwell, 2001) and co-authored Measuring Judicial Independence: The Political Economy of Judging in Japan (2003).