Introduction to Basic Game Theory

This book introduces readers to basic game theory as a tool to deal with strategic decision problems, helping them to understand the complexity of such problems – to extract a solution, if possible – and to manage the complexity by revising the game if appropriate. The authors discuss basic decision situations modeled as Prisoners’ Dilemma, Chicken Game, and Stag Hunt Game, as well as concepts like the Nash equilibrium, Trembling Hand Perfectness, Rationalizable Strategies and the Theory of Moves to introduce game theoretic thinking. Further, the book presents pioneers of strategic thinking, e.g., Sun Tzu, Machiavelli, Adam Smith, and Goethe, and includes cases of conflict and cooperation to illustrate practical applications. Readers learn to apply game theory in business and in daily life – to manage their decision problems and to better understand the decision problems of others.