Understanding Economics: Game Theory - Jay R. Corrigan

Written by Jay R. Corrigan
Format: MP3

Game theory is the study of strategic decision-making in politics, sports, diplomacy, and a host of other areas, but especially in economics, where game theory flourishes. Understanding Economics: Game Theory introduces you to this fascinating field, which combines the fun and challenge of games with the logic of brain teasers. In 12 engaging half-hour lessons, Professor Jay R. Corrigan of Kenyon College analyzes such classic games as the prisoner’s dilemma and the hawk-dove game. While these particular games involve lawbreakers and animal rivalries, they have applications to many situations.

Each lesson is devoted to a handful of examples, which you investigate in detail, working out the possible strategies for the different competitors and their expected payoffs. Along the way, you discover why it’s hard to buy a good used car, why people confess to crimes they didn’t commit, why athletes ignore the risks and use performance-enhancing drugs, and how to bid in different kinds of auctions to increase your payoff—and also why you might regret winning one special type of auction.

Professor Corrigan covers fundamental concepts, such as dominant strategy and Nash equilibrium, the latter named for the reclusive genius who was profiled in the movie A Beautiful Mind. He teaches you how to diagram a game with a payoff matrix, which is a table that shows every player’s payoff based on the chosen strategies. You also practice backward induction, where you start at the game’s last round and work your way back to the beginning to determine your best opening move. These are all powerful tools for seeing the game from opposing points of view and uncovering an optimum strategy. After taking this course, you’ll know what to do the next time you bargain for a used car or get caught in the frenzy of an auction.