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# Game Theory

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Decision Making Using Game Theory (An Introduction For Managers)

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### Transcript of "Game Theory"

1. 1. Decision Making Using Game Theory(An Introduction For Managers)Iran Bahar Business SchoolCompiled By : Ali Salek<br />
2. 2. Introduction<br />Game Theory attempts to mathematically capture behavior in strategic situations, in which an individual's success in making choices depends on the choices of others.<br />
3. 3. GameTheoryEconomists:Theory of Social SituationsPsychologists :?How groups of people interact<br />
4. 4. Basic Constituents<br />1 - Players<br />2- Actions & Strategies<br />3- Rules<br /> 3-1- Sequence <br /> 3-2- Information Structure<br /> 3-3- Outcomes<br /> 3-4- Pay-Offs<br />
5. 5. Types of games<br /> One-player & Many-player games <br /> Cooperative & Non-cooperative <br /> Zero-sum & Non-zero-sum Symmetric & Asymmetric<br /> Simultaneous & Sequential <br /> Perfect information & Imperfect information <br /> Infinitely long games<br /> Discrete & Continuous games <br /> Meta games<br />
6. 6. Game Theory<br />Games of Strategy<br />Games of Skill<br />Games of Chance<br />Two - Person<br /> Risk<br />Multi - Person<br />Uncertainty<br />
7. 7. BranchesGames of strategy<br />GameCooperative <br />(Players’ interests coincide)<br />Non-cooperative Game ((Zero-Sum<br /> (Players’ interests are conflicting)<br />HybridGame<br />((Players’ interests are simultaneously opposed & coincident<br />
8. 8. Economic Theory Branches<br />Decision Theory<br />- Single player against nature <br /> - How best acquire information before making decision <br />General Equilibrium Theory<br /> - Deals with trade & production <br /> - Used in macroeconomic analysis <br />Mechanism Design Theory<br /> . types of rules - Asks about the consequences of different<br /> - Use Meta game type (development of the rules for another game) <br />
9. 9. Game Theory Application In Management<br />Industrial Organization Strategies<br />Corporate Finance<br />Mechanism & Auction Design<br />
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20. 20. Game Features<br />1- Simple representation of a variety <br />of important situations.<br />2- How an intelligent individual should behave! <br />Conflict between the pursuit of individual goals <br />and the common good, is at the heart of many games .<br />3- Game changes in a very significant way if <br />.the game is repeated<br /><< Game theorists have provided a number of theories >><br />If the game is repeated often enough, the suspects <br />!ought to cooperate<br />Contribute to the common good<br />Behave selfishly<br />
21. 21. The difference between genius and stupidity is that genius has its limits! <br />Albert Einstein<br />
22. 22. THE END<br />
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