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An easy to understand introduction to game theory
on 16 April 2015
I found this book at a used book store and while I generally need little prodding to purchase a math book, in this case a quick glance through the first few pages convinced me to purchase it. Although human emotions are powerful forces in our lives, many of our decisions are still made based on rational thought and perceived benefit. This is the realm of game theory, which is an analysis of decision-making based on the interpretation of rewards and punishment.
The first games examined in this book are the standard ones of two-person zero-sum games, first with and then without equilibrium points. A two-person zero-sum game is one where the winnings of one player must match the losses of the other. In other words, the sum total of value held by the two players is a constant. This is followed by an examination of utility theory, which is a determination of the true value of the rewards and punishments. It is here where emotions and personal preference are the strongest. Something as simple as bragging rights can often have more value than large monetary payments. The next chapter deals with two-person non-zero-sum games, where the total value held by the two players is not a constant. The last chapter deals with n-person games, which are difficult to analyze, but are the most interesting because they are closest to life. Success in n-person games almost always requires the formation of a cooperative, in the sense that there is the potential for a coalition that can dominate everyone else.
What I enjoyed the most about this book was the examples and the problems. At the start of the chapters, there is a set of questions that introduce the material, and they are answered at the end of the chapter. In between, the explanations are clear, with a minimum of formulas. I also enjoyed the sections on the various "games" of voting, such as how does a body of legislators decides how to fund projects when each has their pet project that they want to acquire the funding for. It explains some of the labyrinthine features of the congressional process and why it is possible for a deadlock state to develop.
This is one of the best general introductions to game theory that I have seen, the worked problems take you through the features of the games in a step-by-step manner that is very easy to understand.