and everyday life / by Avinash K. Dixit and Barry J. Nalebuff. p. cm. Includes Index . 1. and in some ways strategic thinking remains an art. We do provide. The Art of Strategy – A Game Theorist’s Guide to Success in. Business and Life. Krishna Chandra Balodi. Avinash K. Dixit & Barry J. Nalebuff (). The Art of. The Art of Strategy: A Game Theorist’s Guide to Success in Business and Life by Avinash K. Dixit and Barry J. Nalebuff. The Art of Strategy is.

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The Art of Strategy

Next up, some work related reading. The Art of Strategy: Dixit and Barry J. In the former case they get the offered split. If both betray the other then they will both serve a longer sentence than if they had both kept quiet. These examples represent the simplest two main types of game, the ultimate game is an example of a sequential game where one player makes a decision followed by the other whilst the prisoners dilemma is an example of a simultaneous game where players make their decisions simultaneously.

In real life, chess is an example of a sequential game and a sealed bid auction is a simultaneous game. Simultaneously games are modelled with payoff tables. The complexity of real sequential games, such as chess, means we cannot inspect all possible paths in the game tree, even with high power computing.

The first part of the The Art finishes with some strategies for simultaneous games. These are to look for dominant strategies where they are available, i.

Nash equilibria are those moves which could not be improved, even given knowledge of an opponents moves. There can be multiple Nash equilibria in a game, which means if strategies are not explicitly stated the the players must guess which strategy the other player is using and act accordingly. The second part of the book looks at how the strategies described in the first part are used in action, although these examples are sometimes somewhat hypothetical.


The final part of the book covers applications of game theory in the real world, including auctions, bargaining and voting.

Book review: The Art of Strategy by Avinash K. Dixit and Barry J. Nalebuff

I was interested to learn of the several sorts of auction, the English, Dutch, Japanese and Vickrey. The English auction is perhaps the one we are the most familiar with, participants signal when they wish to make a bid, and the bid rises with time. The Japanese auction is similar in that the bid is always rising but in this case all bidders start in the auction with their hands raised indicating they are bidding and put their hands down when the price is too high.

A Dutch auction is one in which the price starts high, and drops, the winner is the one who first makes a bid. Finally, a Vickrey auction is a sealed-bid auction where the winner is the one the makes the highest bid, but they pay the second highest value.

Game theory is a central topic in at least parts of economics, as witnessed by the award of the pseudo-Nobel Prize for Economics in this area — there is a handy list here http: The Undercover Economist by Tim Harford discusses game theory and its relevance to the mobile frequency auctions in the UK, as well as the example of information in buying second hand cars. The Signal and the Noise by Nate Silver has some discussion of gaming statistics.


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