Behavioral Game Theory

Game theory, the formalized study of strategy, began in the 1940s by asking how emotionless geniuses should play games, but ignored until recently how average people with emotions and limited foresight actually play games. This book marks the first substantial and authoritative effort to close this gap. Colin Camerer, one of the field's leading figures, uses psychological principles and hundreds of experiments to develop mathematical theories of reciprocity, limited strategizing, and learning, which help predict what real people and companies do in strategic situations. Unifying a wealth of information from ongoing studies in strategic behavior, he takes the experimental science of behavioral economics a major step forward. He does so in lucid, friendly prose. Behavioral game theory has three ingredients that come clearly into focus in this book: mathematical theories of how moral obligation and vengeance affect the way people bargain and trust each other; a theory of how limits in the brain constrain the number of steps of 'I think he thinks...' reasoning people naturally do; and a theory of how people learn from experience to make better strategic decisions. Strategic interactions that can be explained by behavioral game theory include bargaining, games of bluffing as in sports and poker, strikes, how conventions help coordinate a joint activity, price competition and patent races, and building up reputations for trustworthiness or ruthlessness in business or life. While there are many books on standard game theory that address the way ideally rational actors operate, "Behavioral Game Theory" stands alone in blending experimental evidence and psychology in a mathematical theory of normal strategic behavior. It is must reading for anyone who seeks a more complete understanding of strategic thinking, from professional economists to scholars and students of economics, management studies, psychology, political science, anthropology, and biology.

ISBN 0691090394   Pages 544 ISBN13 9780691090399 (What's this?)   Volumes 1 Publisher The University Press Group Ltd   Weight (grammes) 942 Imprint Princeton University Press   Published in New Jersey Format Hardback   Series title The Roundtable Series in Behavioral Economics Publication date 25 Feb 2003   Height (mm) 229 Library of Congress BF448   Width (mm) 152 DEWEY 330.015193   Spine width (mm) 36 DEWEY edition DC21   Academic level Professional / Scholarly, Tertiary education

		Preface
1		Introduction		1
1.1		What is Game Theory Good For?		5
1.2		Three Examples		7
1.3		Experimental Regularity and Behavioral Game Theory		20
App. A1.1		Basic Game Theory		25
App. A1.2		Experimental Design		34
2		Dictator, Ultimatum, and Trust Games		43
2.1		Ultimatum and Dictator Games: Basic Results		48
2.2		Methodological Variables		59
2.3		Demographic Variables		63
2.4		Culture		68
2.5		Descriptive Variables: Labeling and Context		74
2.6		Structural Variables		75
2.7		Trust Games		83
2.8		Theory		101
3		Mixed-Strategy Equilibrium		118
3.1		Early Studies		121
3.2		Modern Studies		125
3.3		Subjective Randomization and Mixed Strategies		134
3.4		Explicit Randomization		138
3.5		Patent Race and Location Games with Mixed Equilibria		142
3.6		Two Field Studies		145
4		Bargaining		151
4.1		Unstructured Bargaining		153
4.2		Structured Bargaining		161
4.3		Bargaining under Incomplete Information		182
		More...

"Colin Camerer's Behavioral Game Theory is a major achievement. Nothing like it is available thus far, and the author is uniquely qualified to have written it. He has an impressive understanding of both psychology and economics. He has taken the trouble to 'talk through' hundreds of tricky arguments that elsewhere just get stated mathematically. Rarer still is his positive attitude toward modeling, experimentation, econometrics, and other methodologies. If his book invests others with the same open-minded, synergistic outlook, that alone would make it worthwhile."

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