2

Game Theory

2.1 Introduction

Game theory is perhaps the most important arena for the application of rational decision theory. It is also a breeding ground for innumerable fallacies and paradoxes. However, this book isn’t the place to learn the subject, because I plan to say only enough to allow me to use a few examples here and there. My book Playing for Real is a fairly comprehensive introduction that isn’t mathematically demanding (Binmore 2007b).

2.2 What Is a Game?

A game arises when several players have to make decisions in a situation in which the outcome for each player is partly determined by the choices made by the other players. The states of the world that appear in Pandora’s decision problem must therefore include the end products ...

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