Game theory 101

game theory made easy

game theory made easy

This lecture defines game theoretical "rationality."

*Takeaway Points*

- In every day langauge, "rational" is a synonym of "sensible." This is not the case in game theory.
- A player is rational if his preferences are complete and transitive.
- This definition is extremely inclusive, allowing us to investigate the behavior of seemingly "irrational" agents such as suicide terrorists.
- We also require players to fulfill the independence over lotteries and continuity axioms so that expected utilities work properly.