Imagine the perfect pound cake, with the just-right mixture of substance and sweetness, moisture and flakiness, crust and interior. The title of my review, Perfect Information, may be an inside joke, being a well-defined term in game theory but it is also an apt description of Ed Rosenthal's engaging introduction to a difficult subject. In most other treatments, Game Theory is presented in a format that is either bone dry, too mathematical, or too superficial. The author, an award-winning teacher and research scholar in the field and the veteran of thousands of classroom experiences teaching Game Theory and related subjects, manages to avoid all these extremes, delivering a text that has the perfect blend of theory, illustrative example, and intuitive explanation.
The Subject: Important with Wide-Ranging Applications
Game theory is an increasingly important discipline that applies mathematics to everyday decision making. It provides important insights into such diverse areas as military strategy, economics, biology and public policy. And its results provide important insights into how humans interact with each other. It provides a theoretical framework for thinking about key issues such as competition vs cooperation, information sharing, and rationality (or its lack) in decision making.
Style and Substance: An Easy Engaging Style with lots of Examples and Case Studies
Unlike most other introductions to Game Theory, the book grabs you on almost every page by its liberal use of case studies, examples, and intuition-building discussion of the key concepts. For example the discussion of Prisoner's Dilemma starts off with the prisoners, but then quickly moves the discussion to general applications of the concept, where the "dilemma" comes from, how the players might approach it, and then immediately goes into three case studies or examples - Joint ventures, advertising wars, and bill-splitting among friends. This engaging design makes it both fun to read and amazingly easy to understand the concepts even if you have ADD.
What the book covers
The book covers a lot of ground and is oranized into five major topics. The first section, THE Basics, covers the fundamental theory with lots of examples. The second, How Information Affects Games, covers the concepts of perfect and imperfect information. The third, Getting Ahead by Working Together, looks at bargaining, fair division, and cooperation vs. competition. THe fourth, Individual Values vs. the Group, covers the Tragedy of the Commons, Auctions, and mechanisms to minimize moral hazard. Finally, Behavior in Games covers biology in games, utility theory, behavioral decision theory, and behavior in games.
Together, these topics are sufficient to give the serious reader a full grounding in the principles and applications of game theory. It is equally easy to use this book as a reference - to be consulted on a particular topic, since the chapters pretty much stand alone.
Audience: Who is this book for?
Although anyone with a curious mind is likely to get something out of this book, there are four groups of readers who will find the book especially useful: certain professionals, students, business decision makers/managers, and armchair philosophers.
- Certain professionals, such as doctors, economists, biologists, political scientists, marketing specialists, advertising executives, public relations experts, traders, and strategists will find this book a refreshing source of very useful information in their field
- Students who are enrolled in MBA or similar programs, business undergraduates, and especially those who have game theory as part of their curriculum should find this book an invaluable tool for building intuition.
- A large variety of professionals and managers are confronted with decisions daily that have an element or flavor of the games discussed in this book. They will find the framework very useful for decision making even if they never cast their specific problems into mathematical form.
- Perhaps the audience that would enjoy the book the most is the intelligent individuals and armchair philosophers of the world. The wealth of real life examples makes the discussion of concepts very real and fun to read.
So, are you a student? A quantitative decision maker? A manager? A curious intellectual? Have you been involved in an auction? Do you follow sports teams and statistics? Do you worry about how to make the world a better place? If any of these apply to you, you will find Rosenthal's book a fun and fascinating companion in your armchair travels.