If all the players are playing the strategies in a Nash equilibrium, they have no unilateral incentive to deviate, since their strategy is the best they can do given what others are doing. The payoffs of the game are generally taken to represent the utility of individual players. A prototypical paper on game theory in economics begins by presenting a game that is an abstraction of a particular economic situation. One or more solution concepts are chosen, and the author demonstrates which strategy sets in the presented game are equilibria of the appropriate type.
Naturally one might wonder to what use this information should be put. Economists and business professors suggest two primary uses noted above : descriptive and prescriptive. The application of game theory to political science is focused in the overlapping areas of fair division , political economy , public choice , war bargaining , positive political theory , and social choice theory.
In each of these areas, researchers have developed game-theoretic models in which the players are often voters, states, special interest groups, and politicians. Early examples of game theory applied to political science are provided by Anthony Downs. In his book An Economic Theory of Democracy ,  he applies the Hotelling firm location model to the political process.
In the Downsian model, political candidates commit to ideologies on a one-dimensional policy space. Downs first shows how the political candidates will converge to the ideology preferred by the median voter if voters are fully informed, but then argues that voters choose to remain rationally ignorant which allows for candidate divergence. Game Theory was applied in to the Cuban missile crisis during the presidency of John F.
It has also been proposed that game theory explains the stability of any form of political government. Taking the simplest case of a monarchy, for example, the king, being only one person, does not and cannot maintain his authority by personally exercising physical control over all or even any significant number of his subjects. Sovereign control is instead explained by the recognition by each citizen that all other citizens expect each other to view the king or other established government as the person whose orders will be followed.
Coordinating communication among citizens to replace the sovereign is effectively barred, since conspiracy to replace the sovereign is generally punishable as a crime. Thus, in a process that can be modeled by variants of the prisoner's dilemma , during periods of stability no citizen will find it rational to move to replace the sovereign, even if all the citizens know they would be better off if they were all to act collectively.
A game-theoretic explanation for democratic peace is that public and open debate in democracies sends clear and reliable information regarding their intentions to other states. In contrast, it is difficult to know the intentions of nondemocratic leaders, what effect concessions will have, and if promises will be kept. Thus there will be mistrust and unwillingness to make concessions if at least one of the parties in a dispute is a non-democracy.
On the other hand, game theory predicts that two countries may still go to war even if their leaders are cognizant of the costs of fighting. War may result from asymmetric information; two countries may have incentives to mis-represent the amount of military resources they have on hand, rendering them unable to settle disputes agreeably without resorting to fighting.
Moreover, war may arise because of commitment problems: if two countries wish to settle a dispute via peaceful means, but each wishes to go back on the terms of that settlement, they may have no choice but to resort to warfare. Finally, war may result from issue indivisibilities. Game theory could also help predict a nation's responses when there is a new rule or law to be applied to that nation. One example would be Peter John Wood's research when he looked into what nations could do to help reduce climate change.
Wood thought this could be accomplished by making treaties with other nations to reduce greenhouse gas emissions. However, he concluded that this idea could not work because it would create a prisoner's dilemma to the nations. Unlike those in economics, the payoffs for games in biology are often interpreted as corresponding to fitness.
In addition, the focus has been less on equilibria that correspond to a notion of rationality and more on ones that would be maintained by evolutionary forces. Although its initial motivation did not involve any of the mental requirements of the Nash equilibrium , every ESS is a Nash equilibrium. In biology, game theory has been used as a model to understand many different phenomena.
It was first used to explain the evolution and stability of the approximate sex ratios. Fisher suggested that the sex ratios are a result of evolutionary forces acting on individuals who could be seen as trying to maximize their number of grandchildren.
Additionally, biologists have used evolutionary game theory and the ESS to explain the emergence of animal communication. For example, the mobbing behavior of many species, in which a large number of prey animals attack a larger predator, seems to be an example of spontaneous emergent organization. Ants have also been shown to exhibit feed-forward behavior akin to fashion see Paul Ormerod 's Butterfly Economics. Biologists have used the game of chicken to analyze fighting behavior and territoriality. According to Maynard Smith, in the preface to Evolution and the Theory of Games , "paradoxically, it has turned out that game theory is more readily applied to biology than to the field of economic behaviour for which it was originally designed".
Evolutionary game theory has been used to explain many seemingly incongruous phenomena in nature. One such phenomenon is known as biological altruism.
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This is a situation in which an organism appears to act in a way that benefits other organisms and is detrimental to itself. This is distinct from traditional notions of altruism because such actions are not conscious, but appear to be evolutionary adaptations to increase overall fitness.
Examples can be found in species ranging from vampire bats that regurgitate blood they have obtained from a night's hunting and give it to group members who have failed to feed, to worker bees that care for the queen bee for their entire lives and never mate, to vervet monkeys that warn group members of a predator's approach, even when it endangers that individual's chance of survival.
Evolutionary game theory explains this altruism with the idea of kin selection. Altruists discriminate between the individuals they help and favor relatives. The more closely related two organisms are causes the incidences of altruism to increase because they share many of the same alleles. This means that the altruistic individual, by ensuring that the alleles of its close relative are passed on through survival of its offspring, can forgo the option of having offspring itself because the same number of alleles are passed on.
Ensuring that enough of a sibling's offspring survive to adulthood precludes the necessity of the altruistic individual producing offspring. Similarly if it is considered that information other than that of a genetic nature e. Game theory has come to play an increasingly important role in logic and in computer science. Several logical theories have a basis in game semantics. In addition, computer scientists have used games to model interactive computations. Separately, game theory has played a role in online algorithms ; in particular, the k-server problem , which has in the past been referred to as games with moving costs and request-answer games.
The emergence of the internet has motivated the development of algorithms for finding equilibria in games, markets, computational auctions, peer-to-peer systems, and security and information markets. Algorithmic game theory  and within it algorithmic mechanism design  combine computational algorithm design and analysis of complex systems with economic theory.
Game theory has been put to several uses in philosophy. Responding to two papers by W. In so doing, he provided the first analysis of common knowledge and employed it in analyzing play in coordination games. In addition, he first suggested that one can understand meaning in terms of signaling games. This later suggestion has been pursued by several philosophers since Lewis. Game theory has also challenged philosophers to think in terms of interactive epistemology : what it means for a collective to have common beliefs or knowledge, and what are the consequences of this knowledge for the social outcomes resulting from the interactions of agents.
Philosophers who have worked in this area include Bicchieri , ,   Skyrms ,  and Stalnaker Since games like the prisoner's dilemma present an apparent conflict between morality and self-interest, explaining why cooperation is required by self-interest is an important component of this project. This general strategy is a component of the general social contract view in political philosophy for examples, see Gauthier and Kavka Other authors have attempted to use evolutionary game theory in order to explain the emergence of human attitudes about morality and corresponding animal behaviors.
These authors look at several games including the prisoner's dilemma, stag hunt , and the Nash bargaining game as providing an explanation for the emergence of attitudes about morality see, e. Cite error: A list-defined reference named "ohet" is not used in the content see the help page. From Wikipedia, the free encyclopedia. This article is about the mathematical study of optimizing agents. For the mathematical study of sequential games, see Combinatorial game theory. For the study of playing games for entertainment, see Game studies.
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For other uses, see Game theory disambiguation. The study of mathematical models of strategic interaction between rational decision-makers. Index Outline Category. History Branches Classification. History of economics Schools of economics Mainstream economics Heterodox economics Economic methodology Economic theory Political economy Microeconomics Macroeconomics International economics Applied economics Mathematical economics Econometrics.
Concepts Theory Techniques. Economic systems Economic growth Market National accounting Experimental economics Computational economics Game theory Operations research. By application. Notable economists. Glossary of economics. Main articles: Cooperative game and Non-cooperative game. Main article: Symmetric game. Main article: Zero-sum game. Main articles: Simultaneous game and Sequential game. Prior knowledge of opponent's move?
Extensive-form game Extensive game. Strategy game Strategic game. Main article: Perfect information. Main article: Determinacy. See also: List of games in game theory. Main article: Extensive form game. Main article: Normal-form game. Main article: Cooperative game. Main article: Evolutionary game theory. Applied ethics Chainstore paradox Chemical game theory Collective intentionality Combinatorial game theory Confrontation analysis Glossary of game theory Intra-household bargaining Kingmaker scenario Law and economics Parrondo's paradox Precautionary principle Quantum game theory Quantum refereed game Rationality Reverse game theory Risk management Self-confirming equilibrium Tragedy of the commons Zermelo's theorem.
Chapter-preview links, pp. Statistical Science Statistical Science Vol. Institute Of Mathematical Statistics. Bibcode : arXivB. Game theory applications in network design. IGI Global. In Weintraub, E. Roy ed. Toward a History of Game Theory. Durham: Duke University Press. Retrieved on 3 January A New Kind of Science. Wolfram Media, Inc. Game Theory: Third Edition. Bingley: Emerald Group Publishing. Stack Exchange. Handbook of Game Theory with Economic Applications. Volume 1.
PBS Infinite Series. Perfect information defined at , with academic sources arXiv : Hearn; Erik D. Game-theoretic problems of mechanics. Games and Information , 4th ed. Description and chapter-preview. David M. Kreps Game Theory and Economic Modelling. Security Studies: an Introduction second edition. J Evol Econ. Camerer Archived 14 May at the Wayback Machine. Edward N. Zalta ed. Retrieved 21 August Your reader barcode: Your last name:. Cite this Email this Add to favourites Print this page.
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To learn more about Copies Direct watch this short online video. Need help? Density functional theory provides electronic structure calculations in condensed matter physics and quantum chemistry and predicts, for example, the energy of atomic bonds. Morten P. The reactions are modular, allowing for combinations of small units to create a wide variety of new and useful compounds. Edwin M. For invention of the Southern blot method for determining specific DNA sequences. We recognize Southern for his powerful method to identify a single gene in DNA.
His invention was the beginning of genetic mapping, diagnosis, and screening, and is the basis of today's personalized medicine. Marvin H. Leroy E. For contributions to protein and DNA sequencing and synthesis. We recognize this trio of research pioneers who, separately and together, created tools that accelerated advances in biology and medicine.
Without their inventions, which appeared in the s, there would be no map of the Human Genome. For research exploring the consequences of increasing returns or network effects in economic systems. We recognize Arthur for describing how small events and positive feedback loops act over time to lock an economy into the domination of one player out of several possible.
Arthur has also combined the new science of complexity research with economics to show how an economy functions when its players face ill-defined problems and an ever-changing system, and are unable to act with perfect rationality.
For contributions to econometrics and cointegration analysis. For developing the cointegrated VAR vector autoregressive method, which provides a flexible framework to study short- and long-term effects in economic time-series data. The method helps economists avoid confirmation bias in their analyses. For development of formal theoretical economic models and especially models of bounded rationality, including his model of bargaining, which has had profound influence in Economics. David Pendlebury , Citation Analyst at the Institute for Scientific Information said, "We are honored to add another 19 distinguished academics to the Hall of Citation Laureates this year.
This years' Laureates have advanced our understanding of topics as varied as economic growth, cryptography, Parkinson's disease, rheumatoid arthritis, and cancer; they have given us new tools to map the human genome, personalize medicine, and test drugs without harming animals. The high number of citations they have gathered throughout their careers is a quantitative narrative of how their discoveries have influenced their peers, the broader scientific community, and the world at large.
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