Lesson 1
Strategies, Actions, Outcomes and Payoffs Part 1
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We introduce Game Theory by playing a game. We organize the game into players, their strategies, and their goals or payoffs; and we learn that we should decide what our goals are before we make choices. With some plausible payoffs, our game is a prisoners' dilemma. We learn that we should never choose a dominated strategy; but that rational play by rational players can lead to bad outcomes. We discuss some prisoners' dilemmas in the real world and some possible real-world remedies. With other plausible payoffs, our game is a coordination problem and has very different outcomes: so different payoffs matter. We should put ourselves in others' shoes and try to predict what they will do. Polak, Ben. ECON 159, Game Theory, Fall 2007. Yale OpenCourseWare: Economics, Accessed 29/9/14 http://oyc.yale.edu/economics/econ-159/lecture-1 License: Creative Commons BY-NC-SA

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