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Book Details

  • Hardcover
  • Bookstore's Wholesale Price: $95.00
  • May 2013
  • ISBN: 978-0-393-91838-0
  • 512 pages
  • Territory Rights: Worldwide

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  1. Economics
    1. Game Theory


An Introduction to Game Theory

Third Edition


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Joel Watson (Author, University of California, San Diego)


The perfect balance of readability and formalism.

Joel Watson has refined his successful text to make it even more student-friendly. A number of sections have been added, and numerous chapters have been substantially revised. Dozens of new exercises have been added, along with solutions to selected exercises. Chapters are short and focused, with just the right amount of mathematical content and end-of-chapter exercises. New passages walk students through tricky topics.


Contracting and contract enforcement

A wide range of interesting strategic behavior relates to the formation and enforcement of contracts, and Strategy breaks new ground by bringing contracting into the course, including coverage of verifiability, the hold-up problem, and option contracts.  

Extensive form early

The text starts by emphasizing the key concept of a strategy, introducing games in the more intuitive analytical framework called the “extensive form.” After this brief introduction, students encounter games in the “normal form.” The development of concepts and applications proceeds from the simplest static settings (where normal-form concepts are utilized) to dynamic settings (with extensive-form solution concepts) to settings with incomplete information. 

A guided exercise in each chapter, plus solutions to selected exercises

Game theory is best mastered by problem solving, and Strategy has numerous end-of-chapter exercises. The Third Edition includes dozens of new exercises and solutions to some of the exercises. The text also has one completely solved exercise at the end of each chapter to help the student comprehend the topics presented. 

New sections on applications

The Third Edition has several new sections. Chapter 9 analyzes the Arab Spring of 2011 using game theory, Chapter 11 discusses randomization in sports and randomization in competitive pricing, Chapter 16 looks at the dynamics of competitive pricing with capacity constraints, and Chapter 18 discusses the “Coase Theorem.” These are in addition to several other new applications. Strategy also contains compelling discussions of strategic voting, bargaining in legislatures, cheap talk and legislative committees, information aggregation and voting, and the Hotelling-Downs median voter theorem.  

New passages on important theoretical topics

The Third Edition contains new coverage of weak dominance, conditional dominance, forward induction, continuation value/payoff, and the Nash bargaining solution. 

    1) Introduction

    Part I: Representations and Basic Assumptions
    2) The Extensive Form
    3) Strategies and the Normal Form
    4) Beliefs, Mixed Strategies, and Expected Payoffs
    5) General Assumptions and Methodology

    Part II: Analyzing Behavior in Static Settings
    6) Dominance and Best Response
    7) Rationalizability and Iterated Dominance
    8) Location, Partnership, and Social Unrest
    9) Nash Equilibrium
    10) Oligopoly, Tariffs, Crime, and Voting
    11) Mixed-Strategy Nash Equilibrium
    12) Strictly Competitive Games and Security Strategies
    13) Contract, Law, and Enforcement in Static Settings

    Part III: Analyzing Behavior in Dynamic Settings
    14) Details of the Extensive Form
    15) Sequential Rationality and Solution Concepts
    16) Topics in Industrial Organization
    17) Parlor Games
    18) Bargaining Problems
    19) Analysis of Simple Bargaining Games
    20) Games with Joint Decisions; Negotiation Equilibrium
    21) Unverifiable Investment, Hold Up, Options, And Ownership
    22) Repeated Games and Reputation
    23) Collusion, Trade Agreements, and Goodwill

    Part IV: Information
    24) Random Events and Incomplete Information
    25) Risk and Incentives in Contracting
    26) Bayesian Nash Equilibrium and Rationalizability
    27) Lemons, Auctions, and Information Aggregation
    28) Perfect Bayesian Equilibrium
    29) Job-Market Signaling and Reputation

    A) Review of Mathematics
    B) The Mathematics of Rationalizability and Existence of Nash Equilibirum