In this book we are going to learn the fundamentals of game theory: the science of strategic interaction. We’re going to try to walk a fine line in this book between rigor and interesting applications. A completely rigorous treatment of game theory would require many thousands of pages, a lot of advanced mathematics, and years of difficult study. On the other hand, one could write a book that is only driven by interesting storytelling, without laying a firm foundation of understanding.
In this book I will familiarize the reader with much of the logic and terminology of Game Theory, but will avoid focusing on overly complicated formal definitions. Thus, sometimes I will use terms in a “looser” fashion than one would do in a formal, university class on Game Theory because I want this book to make you into a user of these principles, rather than a memorizer of terms.
I hope that this book finds that middle ground between in an exciting thriller and a reference manual. In the first five chapters we lay down a lot of fundamentals, trying to give as many interesting examples as possible. The book will get more interesting and more applicable to the real world as it goes along, so stick with it!
If you find anything in the book confusing, or would like to see more examples, I invite you to come to gametheory.burkeyacademy.com for my collection of YouTube videos and other resources. Feel free to make requests, and I will happily respond as I have time.
A Note to Game Theorists:
In this short book I loosely define some concepts, and in particular am looser with the term “Equilibrium” than most PhD Game Theorists would prefer. My goal for people reading this book is to develop a true appreciation for thinking ahead and reasoning back to what “reasonable” actions might be. Focusing on the distinction between an “equilibrium path” and an equilibrium, for example, just does not fit well into what this book tries to accomplish—low on formality, high on intuition.