Games People Play: Game Theory in Life, Business, and Beyond

Overview

Learn how to apply the precepts of game theory to help you make better decisions at work, home, or anywhere with this highly useful course taught by an award-winning professor.

Ever since modern game theory—the scientific study of interactive, rational decision making—achieved prominence in the mid-20th century, it has proven instrumental in helping us understand how and why we make decisions. Game theory plays a crucial role in our lives and provides startling insights into all endeavors in which humans cooperate or compete, including biology, computer science, politics, agriculture, and, most importantly, economics.

For example, game theory has become an invaluable tool for economists, underpinning the theories of five Nobel Prize winners in economics; helps corporate decision makers through the alternatives of complex negotiations where thousands of jobs and billions of dollars may be at stake; plays a crucial role in international diplomacy and military strategy, influencing the fates of nations even when that influence may well be invisible to the uninitiated; and provides insights into the origins of human behaviors, not only for psychologists seeking to understand why we act as we do, but also for evolutionary biologists asking how those patterns of actions—as human strategies—were handed down.

You can even see game theory at work in the interactions you engage in every day, such as an obvious “game,” like buying a car, or a less obvious one, like trying to decide where to go on a Saturday night or how you ought to dress.

A basic working knowledge of this profoundly important tool can help us cut through an often confusing clutter of information—allowing us to make better decisions in our own lives or better understand the decisions facing other players in games. In Games People Play: Game Theory in Life, Business, and Beyond, award-winning Professor Scott P. Stevens of James Madison University has designed a course meant for anyone looking to gain that knowledge. In 24 insightful lectures, he presents you with the fundamentals of game theory in a manner that is both engaging and easy to understand.

Course Structure

01: The World of Game Theory

“Games” apply to all aspects of life. You’re introduced to the subject with a perplexing dilemma, a brief history of the field, and some of its applications, and the three fundamental components of any game: players, strategies, and payoffs.
Duration: 33 min

02: The Nature of the Game

You gain a deeper insight into the essential building blocks of players, strategies, and payoffs—most of them more complex and subtle than they might appear—along with two new concepts, rationality and common sense.
Duration: 30 min

03: The Real Life Chessboard – Sequential Games

In seeking the optimal strategies for games in which players take turns and where the full history of the game is known to all, you learn how to construct a “game tree” and are introduced to one of game theory’s key concepts: the Nash equilibrium.
Duration: 31 min

04: Life’s Little Games – The 2 x 2 Classic Games

You examine four classic two-player games, with each player considering his or her own two choices. Simple though they may be, these games appear at the heart of larger, more complicated games and provide important insights into dealing effectively with others.
Duration: 31 min

05: Guessing Right – Simultaneous Move Games

You learn a general way of representing simultaneous-move games—where players make decisions without knowing those of others—and acquire valuable tools to solve them. Military and business examples are used to introduce the minimax approach, the iterated elimination of dominated strategies, and the best response method.
Duration: 30 min

06: Practical Applications of Game Theory

Applying what you’ve learned, you see how a stock bid of $98 can beat one of $102; how insisting you lose a competition can be a winning strategy; and why being blackmailed can be in your best interest.
Duration: 31 min

07: A Random Walk – Dealing with Chance Events

Many games include aspects that depend on random chance. Probability theory addresses such uncertainties. Using a simultaneous, two-player game, Professor Stevens shows you how to use probability to define the expected (or average) value of a payoff in an uncertain situation.
Duration: 31 min

08: Pure Competition – Constant-Sum Games

Can you escape the second-guessing that arises when each player in a two-person game tries to anticipate the other’s choice? You learn how every such game, no matter how apparently hopeless, has at least one Nash equilibrium point.
Duration: 31 min

09: Mixed Strategies and Nonzero-Sum Games

How should we think about mixed strategies? What makes a given strategy “best”? Is there an easy way to determine if a set of strategies is optimal? You explore these questions from a more intuitive perspective and learn how to use the techniques of Lecture 8 in nonzero-sum games.
Duration: 30 min

10: Threats, Promises, and Commitments

Can you gain an advantage by moving before the game begins? Such actions, called “strategic moves,” can be both effective and dangerous. You learn the three categories of strategic moves—commitments, threats, and promises—and the essential requirement for their success: credibility.
Duration: 30 min

11: Credibility, Deterrence, and Compellence

This lecture explains how a player best gains credibility for a threat, promise, or commitment and also explores how these strategic moves are most commonly and advantageously used for deterrence (meant to maintain the status quo) and compellence (meant to change it).
Duration: 31 min

12: Incomplete and Imperfect Information

What if some events or decisions are known to only one player? This lecture explores such games of asymmetric information and introduces you to a clever means of analyzing such a game.
Duration: 30 min

13: Whom Can You Trust? – Signaling and Screening

This lecture uses examples from mythology, the animal world, movies, card games, and real life to show you how players in a game of asymmetric information try to convey information, elicit it, or guard it.
Duration: 31 min

14: Encouraging Productivity – Incentive Schemes

How do you get others to do what you want them to do, whether in business, politics, international relations, or daily life? You learn how players create an alignment between the behavior they desire and the rewards other players receive and examine what can be done when the behavior being addressed is not directly observable.
Duration: 31 min

15: The Persistence of Memory – Repeated Games

Although the games so far have been simplified examples assuming no previous or subsequent interactions, real-life games generally don’t work that way. This lecture uses an iterated game of Prisoner’s Dilemma to examine the impact of repeated interactions on determining optimal strategy.
Duration: 30 min

16: Does This Stuff Really Work?

Can game theory accurately model real-world behavior? You examine some reasons that its track record for predicting behavior in some designed experiments and some observed behavior has been mixed.
Duration: 31 min

17: The Tragedy of the Commons

You explore what is essentially a many-player version of Prisoner’s Dilemma. Each player’s self-interested choices ironically contribute to a social dilemma in which every player suffers, in a scenario equally applicable to topics as diverse as global warming, traffic congestion, and the use of almost any nonrenewable resource.
Duration: 30 min

18: Games in Motion – Evolutionary Game Theory

Classical game theory relies heavily on the assumption of rationality. This lecture examines an evolutionary perspective, in which successful strategies are “selected for” and propagate through time.
Duration: 31 min

19: Game Theory and Economics – Oligopolies

You explore how game theory is used in economics—a discipline in which five Nobel Prize winners have been game theorists—by seeing how a monopolist determines optimum production levels and how other competitors affect the situation.
Duration: 30 min

20: Voting – Determining the Will of the People

Can game theory evaluate voting systems? You apply what you’ve learned to several approaches and encounter a theory that no system ranking the candidates can avoid serious problems before you move on to two alternatives that might.
Duration: 31 min

21: Auctions and the Winner’s Curse

Auctions play a significant role in our lives, affecting the ownership of radio frequencies, the flow of goods over the Internet, and even the results produced by search engines. This lecture discusses some important categories of auctions and examines which is best for buyer and seller.
Duration: 31 min

22: Bargaining and Cooperative Games

Cooperative games are ones in which players may join in binding agreements. But how do you identify a division of the payoffs that is reasonable and fair? And what mechanisms persuade members of a coalition to accept their allotment?
Duration: 30 min

23: Game Theory and Business – Co-opetition

In the first of two lectures on Brandenberger’s and Nalebuff’s practical application of game theory to business decision making, you learn how to construct an analytic schematic of key relationships and discuss the impact of both players and the concept of added value.
Duration: 31 min

24: All the World’s a Game

You complete your introduction to co-opetition by adding the concept of rules, tactics, and scope to the plays and added value before examining the materials in a broader context, particularly the relevance of game theory to our daily lives.
Duration: 31 min