Thursday, September 27, 2007

A Website On Game Theory

Like most people with graduate level training in economics, I've had a fairly good exposure to game theory. For those who are unfamiliar with the term, game theory analyzes situations where an individual's actions affect not only their own welfare (i.e. their "payoffs"), but also the payoffs to others with whom they are interacting. The graph above illustrates probably the most well know game-theoretic scenario, known as the Prisoner's Dilemma.

The picture comes from Robert Schenk's site, CyberEconomics. He has a nice section on game theory that's both factually correct and easily understandable here.


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