Introduction to game-theory calculations

Nicola Orsini, Debora Rizzuto and Nicola Nante
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Debora Rizzuto: University of Siena
Nicola Nante: University of Siena

Stata Journal, 2005, vol. 5, issue 3, pages 355-370

Abstract: Game theory can be defined as the study of mathematical mod- els of conflict and cooperation between intelligent and rational decision makers (Myerson 1991). Game-theory concepts apply in economy, sociology, biology, and health care, and whenever the actions of several agents (individuals, groups, or any combination of these) are interdependent. We present a new command gamet to represent the extensive form (game tree) and the strategic form (payoff matrix) of a noncooperative game and to identify the solution of a nonzero and zero-sum game through dominant and dominated strategies, iterated elimination of domi- nated strategies, and Nash equilibrium in pure and fully mixed strategies. Further, gamet can identify the solution of a zero-sum game through maximin criterion and the solution of an extensive form game through backward induction. Copyright 2005 by StataCorp LP.

Keywords: Game theory; Nash equilibrium; payoff matrix; zero-sum game; game tree (search for similar items in EconPapers)
Date: 2005

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