Game Theory 101

These notes are from the book. The author has this same info as a free series on youtube, which I found way more approachable than the book. But I want notes so I can do a refresher, and that’s what the book is good for.

Most of the book is introducing techniques for crunching numbers of specific toy examples. The complexity of the games, assumptions, and number crunching increases, and eventually he generalizes the games a bit and shows you parallels to real world.

• Everyone wants to get to their destination as fast as possible, but we obey stoplights. Why? Because crashing is so bad that if you’re given a coordination mechanism, you’ll use it.
• Civil wars rarely end before total military defeat because participating in a civil war due to ‘commitment problems’–that is, revolutionaries burn bridges, which means there’s no going back–they no longer have the choice to give up but that makes them fight harder.
• In a sequential game, closing off your own options in a way that makes a threat credible or immediate can drive your counterpart to look for an easy way out.
• When a promise to cooperate is not credible, sometimes a game ends up in a mutually suboptimal outcome.

In the last chapter, he gives coverage of the median voter theorem (the reason why after presidential primaries, presidential candidates dart toward the middle of the political spectrum) and how second-price auctions work so well.