ECON 159: Game Theory

1. Introduction: five first lessons

Definition. My strategy $\alpha$ strictly dominates $\beta$ my strategy if my payoff from $\alpha$ is strictly higher than $\beta$ that from regardless of others’ choices.

Lesson 1. You should never play a strictly dominated strategy.

Lesson 2. Rational play by rational players can lead to bad outcomes.

Lesson 3. To figure out what actions you should choose in a game, a good first step is to figure out what are your payoffs (what do you care about) and what are other players’ payoffs.

Lesson 4. If you do not have a dominated strategy, put yourself in your opponents’ shoes to try to predict what they will do. For example, in their shoes, you would not choose a dominated strategy.

Lesson 5. Yale students are evil.

2. Putting yourselves into other people’s shoes