Economics Game Theory In Behavioral Economics Questions Long
In game theory, various types of games are studied to analyze strategic decision-making and interactions among rational individuals. Some of the different types of games studied in game theory include:
1. Normal Form Games: These games are represented by a matrix or a table, where each player has a set of strategies to choose from, and the outcome of the game depends on the strategies chosen by all players simultaneously. Examples of normal form games include the Prisoner's Dilemma, Battle of the Sexes, and the Stag Hunt.
2. Extensive Form Games: These games are represented by a tree-like structure, where players make sequential decisions at different points in time. Each player's decision at each node of the tree is influenced by the decisions made by previous players. Examples of extensive form games include the Ultimatum Game and the Centipede Game.
3. Cooperative Games: In cooperative games, players can form coalitions and negotiate agreements to achieve a joint outcome. The focus is on how players can cooperate and distribute the gains from cooperation among themselves. Examples of cooperative games include the Nash Bargaining Game and the Shapley Value.
4. Simultaneous Move Games: These games involve players making decisions simultaneously without knowing the choices of other players. The outcome of the game is determined by the strategies chosen by all players simultaneously. Examples of simultaneous move games include the Prisoner's Dilemma and the Battle of the Sexes.
5. Repeated Games: In repeated games, players interact with each other repeatedly over a certain period. The outcome of each interaction can influence future interactions, leading to the possibility of cooperation and the emergence of strategies such as tit-for-tat. Examples of repeated games include the Iterated Prisoner's Dilemma and the Folk Theorem.
6. Zero-Sum Games: In zero-sum games, the total payoff of all players remains constant, meaning that any gain by one player is offset by an equal loss by another player. These games are characterized by a strictly competitive nature, where one player's gain is directly proportional to another player's loss. Examples of zero-sum games include Poker and Chess.
7. Bayesian Games: Bayesian games incorporate uncertainty and incomplete information, where players have different beliefs about the state of the world. Players update their beliefs based on the actions and observations of other players, leading to strategic decision-making under uncertainty. Examples of Bayesian games include Auctions and Signaling Games.
These are just a few examples of the different types of games studied in game theory. Each type of game provides a unique framework to analyze strategic interactions and decision-making, allowing economists to understand and predict behavior in various real-world situations.