Game theory

Compare incentives, equilibria, coordination, commitments, repeated interaction, private information, signals, bargaining, and auction rules. Separate model solutions from behavior and fairness.

Prerequisite: Arithmetic and percentages. No economics, calculus, or previous game theory required. Thirteen lessons and 26 illustrated exercises connect strategic models to decisions under interdependence. Ten interactive views retain payoff comparisons, game trees, complete reasoning traces, and explicit assumptions. Equilibrium is a conditional incentive claim, not a forecast or a fairness test.

Lessons

1. 1

   Describe a strategic interaction

   Identify who chooses, what they know, and how joint choices produce outcomes.

2. 2

   Compare actions against every alternative

   Distinguish a best response to one opponent choice from dominance across all choices.

3. 3

   Find mutual best responses

   Check Nash equilibrium one deviation at a time, then ask what it does not prove.

4. 4

   Separate shared gains from coordination risk

   Use beliefs to explain why a better joint outcome may not be selected.

5. 5

   Make the opponent indifferent

   Calculate expected utilities and the probabilities needed for a mixed equilibrium.

6. 6

   Solve continuation choices before earlier moves

   Read a game tree and reason backward without confusing the analysis with play order.

7. 7

   Distinguish a threat from a commitment

   Test whether a promised response remains attractive when its decision point arrives.

8. 8

   Compare today's temptation with future consequences

   Derive a repeated-game incentive condition and inspect what monitoring must support.

9. 9

   Choose when the other player knows more

   Represent private types and compare decisions with and without additional information.

10. 10

    Check whether a signal can separate types

    Compare the incentives to send or imitate a costly signal.

11. 11

    Separate the available surplus from its division

    Use outside options and an explicit offer protocol to reason about agreement.

12. 12

    Compare bidding rules under stated values

    Explain why a payment rule changes incentives even when the object and bidders stay fixed.

13. 13

    Audit a strategic recommendation

    Check the game, the solution concept, and the evidence before acting on a model.