Game Theory in Economics

Chapter 2, Decisionmakers

by Lloyd S. Shapley, Martin Shubik


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Discussion of the concepts of "player" and "coalition" in game theory, with special reference to economic applications. Two examples, a "duel" and a "truel," are analyzed in some detail in order to reveal the sharp change in viewpoint required in passing from an inessential two-person game to an essential three-person game. Techniques for increasing the number of players in a model by replication or fragmentation (disaggregation) are described, and the literature on infinite-person games is briefly surveyed. Finally, some of the modeling problems associated with representative types of economic "player" are considered from a practical standpoint.

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