Understanding Economics: Game Theory

Optimize your life with game theory-the study of how people make decisions. An award-winning teacher explains the basics.
Understanding Economics: Game Theory is rated 4.7 out of 5 by 6.
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Rated 4 out of 5 by from A good guidebook with an excellent bibliography Pros • A broadly annotated bibliography with highly interesting and important references. • The guidebook has an agreeable design and its writing is clear and concise. • The lecturer's presentation was well-paced. Cons • The reading of payoff matrices was poorly explained. As a consequence, the use of graphics in the presentations to illustrate the matrices was distracting. • The nuggets of knowledge worth having are sprinkled throughout. While there are important lessons to learn from Game Theory, time would more efficiently be spent studying the referenced material in the bibliography than attending to the lectures or reading the guidebook.
Date published: 2021-06-12
Rated 5 out of 5 by from Very interesting and well explained topic (mostly) I very much enjoyed this series! Just like when I took a statistics class in college I find myself viewing many things in a different light. Game theory, it appears, is everywhere. I guess I just didn't notice it before. Professor Corrigan explains things in a way that is generally easy to understand. (I'm still not completely clear on lecture 6 but I think that's on me.) I almost gave 4 stars because of lecture 6 and the slightly annoying accent progression. (Lecture 1 could be a midwestern news anchor but by lecture 11 it sounds like he's impersonating Matthew McConaughey.) However, the substance of the lectures is really amazing and enlightening and to his credit, accessible to me. I hope he makes a sequel series! I think video was best because the graphs are helpful to understand complex areas in my opinion.
Date published: 2021-04-03
Rated 5 out of 5 by from Useful and well presented This was an enjoyable and useful Course. Jay C explained things clearly and pointed out where a concept applied in real life.
Date published: 2021-03-28
Rated 4 out of 5 by from A Worthwhile Intro If you are attracted to math and economics, and know little about game theory, this course is a worthwhile introduction. By way of definition, for an economist a game "has two or more players who choose what to do based on what they think other players will do. In other words, a game is strategic, and game theory is the formalized study of interactions between strategic players." The course starts with the famous Prisoner's Dilemma and develops basic analyses of various other types of games from there. (If you have never heard of the Prisoner's Dilemma, I suggest you read about it first. Whether you find yourself drawn to it may be a good indicator of whether you will appreciate this course.) Professor Corrigan is excellent at explaining his topic - clear, organized, and enthusiastic. His focus is very much on the pure logic of analyzing the games, and a moderate amount of math is employed. It is mostly first-year algebra, but the basic ideas can be well understood even if you choose not to follow the mathematics in detail. And I found the lectures on auctions, our professor's own research area, to be particularly fascinating. My personal disappointment with the course may not apply to others. The lectures describe the games' logic with relatively little discussion of how real people deal with similar situations in real life. This is treated to some extent, but minimally. I wish more attention had been paid to the fascinating field of behavioral economics, the study of the actual irrationality of much human behavior which has so thoroughly changed the traditional economics approach of treating all people as rational actors, and to how behavioral economics can be applied to game theory. Also - our professor often repeats the same basic points, often in the same words, again and again and again. And again. The actual information content of the course could, in my always humble opinion, have been presented in six rather than twelve lectures. And one comment about a very weird point. In the lectures on auctions, paying what you value for something is (repeatedly) said to be "like paying $10 for a $10 bill." Well, no. I might pay $10 for a book that I value at $10, but I can read the book and I can't read the bill. So - consider this course carefully. It may be very worthwhile for those interested. But be sure you know what you will be getting, so you don't pay more than $10 for a $10 bill. Enjoy.
Date published: 2021-03-18
Rated 5 out of 5 by from Great Handling of Complex Topic Game Theory is a complex topic, but the professor does a great job keeping the explanations simple, and he relates the theory to many real world situations. Most lectures require no more math than what students learn in 7th and 8th grade algebra. The last lecture works best if the viewer has finished high school because the professor uses introductory differential calculus to find optimal solutions, but the professor also explains it with graphs for any viewers not familiar with basic calculus.
Date published: 2021-03-11
Rated 5 out of 5 by from Clear and insightful To be clear here - this is a course on the area of mathematics and economics called game theory (NOT about what we commonly think of as games: chess, checkers etc.) so the course involves a certain degree of abstraction, numerical manipulation, and logical argumentation. However, if you can follow a bus timetable, solve a crossword, and can handle simple linear equtaions (e.g. "Find p if 0.5(1-p)=2+p" ) then you should have all you need. That and a desire to learn of course! And even the algebra side is only important in a couple of lectures. There are a lot of positives to this course: an enthusiastic professor (who seems to be really enjoying his time in front of the camera), excellent graphics, and many real-world examples and applications. If you are interested in applied math or economics, or just curious about how people reason when placed in decision making situations, this is a great introduction. Note, however, that it is consciously designed as an introduction and is therefore math-lite (open a graduate text on game theory at your peril!) but it will give you a good overview of the key ideas. More importantly you will start to see examples of "games" all around you and you will have some of the conceptual tools needed to analyze them. Recommended.
Date published: 2021-03-11
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Overview

Taught by Professor Jay R. Corrigan, an award-winning teacher at Kenyon College, this course introduces you to game theory, which is the study of how people make strategic decisions in business, commerce, and a host of other activities. Focusing on the fundamentals, Professor Corrigan explains the principles of games and the best strategies, while opening your eyes to the games going on all around you.

About

Jay R. Corrigan
Jay R. Corrigan

Game theory is a highly effective way of looking at and better understanding strategic behavior from every part of life.

INSTITUTION

Kenyon College

Jay R. Corrigan is a Professor of Economics at Kenyon College. He earned a BA in Economics from Grinnell College and a PhD in Economics from Iowa State University.

Professor Corrigan’s writing has appeared in The Washington Post and Barron’s. His scholarly publications in economics, public health, and substance abuse journals have been cited more than 1,000 times. His research has been covered by news outlets such as ABC, NBC, and BBC World News, and his work was included in a Washington Post list of the 10 best works on political economy in 2018.

Professor Corrigan is a recipient of Kenyon College’s Trustee Teaching Excellence Award, and The Princeton Review named him one of America’s best college professors.

By This Professor

Understanding Economics: Game Theory

Trailer

Game Theory Basics: The Prisoner’s Dilemma

01: Game Theory Basics: The Prisoner’s Dilemma

Begin your study of game theory by considering the difference between a decision and a game. Then look at two key concepts, dominant strategy and the Nash equilibrium—the latter named for mathematician John F. Nash, profiled in the movie A Beautiful Mind. Use these ideas to interpret the notorious prisoner’s dilemma, where two rational individuals with strong incentives to cooperate choose not to.

30 min
Repeated Prisoner’s Dilemma Games

02: Repeated Prisoner’s Dilemma Games

Take prisoner’s dilemma to the next level, where the game is played not just once, but repeatedly. Contrast the equilibrium strategy with what real people typically do. Examples include trench warfare during World War I, when the two sides often fell into a live-and-let-live equilibrium, and the price-fixing scheme among many US colleges that set tuition and financial aid grants for three decades.

30 min
The Game of Chicken

03: The Game of Chicken

Learn to analyze strategy in the game of chicken, in which two cars barrel toward each other and the first to veer away is the loser. Versions of chicken play out in nature in the competition among animals for mates, and in the US Congress, where budget battles with the president risk government shutdown if neither side yields. See how chicken differs in crucial ways from the prisoner’s dilemma.

28 min
Reaching Consensus: Coordination Games

04: Reaching Consensus: Coordination Games

Turn from games of conflict to those of coordination—for example, when companies must decide between competing standards where it’s in everyone’s best interest to make the same choice. Historically, the triumph of VHS for videorecording over Betamax shows that the superior standard doesn’t always prevail. Discover that all coordination games have more than one Nash equilibrium.

29 min
Run or Pass? Games with Mixed Strategies

05: Run or Pass? Games with Mixed Strategies

Whether they realize it or not, football coaches use game theory when choosing offensive and defensive strategies. Obviously, they want to keep the other team guessing, which means being unpredictable in ways that maximize the average gain per play. This approach is called a mixed strategy. See how it also applies for stores scheduling sales to keep consumers guessing—and buying.

29 min
Let’s Take Turns: Sequential-Move Games

06: Let’s Take Turns: Sequential-Move Games

Now look at sequential-move games, where players take turns. Examples include the strategies involved when Congress passes a bill and the president must decide whether to veto it. Also analyze the ultimatum game, a classic of behavioral economics in which an allocator proposes a division of money and a decider either accepts the split or rejects it so that both sides get nothing.

32 min
When Backward Induction Works—and Doesn’t

07: When Backward Induction Works—and Doesn’t

The strategy of backward induction starts at the last decision in a game and then reasons back to the beginning. Although this is an effective approach, it can produce strange results. Explore several examples, including a game created by Nobel Prize-winner Reinhard Selten. Learn why real players often resist using backward induction for a good reason, whether they realize it or not.

34 min
Asymmetric Information in Poker and Life

08: Asymmetric Information in Poker and Life

Many situations in life involve interactions where one party has critical information not available to the other. A classic case is poker, where this asymmetry adds spice to the game. A more stressful example is buying a used car, where the seller’s knowledge of the vehicle’s true condition puts the buyer at a disadvantage. Consider the role of signaling in reducing this asymmetry.

30 min
Divide and Conquer: Separating Equilibrium

09: Divide and Conquer: Separating Equilibrium

Ever wonder why coach seats are so cramped? The airlines’ challenge is to make the first-class and coach experiences different enough to lure free-spending passengers to first class without making economy travelers so miserable they won’t fly. See how game theory explains this practice. Then discover that dueling may have evolved to correct the problem of asymmetric information in loaning money.

29 min
Going Once, Going Twice: Auctions as Games

10: Going Once, Going Twice: Auctions as Games

Life is full of negotiations that are, in fact, auctions—from buying a house to accepting an airline’s offer of a voucher on an oversold flight. Study four types of auctions, including the second-price auction, in which the winner pays the second-highest bid. This approach encourages participants to offer the true amount they’re willing to pay. Learn strategies for each type of auction.

28 min
Hidden Auctions: Common Value and All-Pay

11: Hidden Auctions: Common Value and All-Pay

Focus on common-value auctions, where the item for sale has the same value to everyone who’s bidding on it. The problem is, no one knows what that value is. In these cases, it’s easy to overbid and fall victim to the winner’s curse—paying more for an asset than it’s worth. Get tips on how to avoid this pitfall. Also, look at all-pay auctions, where everyone—not just the winner—pays what they bid.

30 min
Games with Continuous Strategies

12: Games with Continuous Strategies

Close by seeing the power of calculus for analyzing games with continuous strategies (no prior experience with calculus needed). Examples include gunboat tactics to combat pirates, and bull elk competition in antler growth with the goal of attracting mates. Not only does game theory explain the way people behave in strategic interactions, but it can also lead to insights about the animal world!

32 min