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ECON 159: Game Theory

Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats. We first discuss Zermelo's theorem: that games like tic-tac-toe or chess have a solution. That is, either there is a way for player 1 to force a win, or there is a way for player 1 to force a tie, or there is a way for player 2 to force a win. The proof is by induction. Then we formally define and informally discuss both perfect information and strategies in such games. This allows us to find Nash equilibria in sequential games. But we find that some Nash equilibria are inconsistent with backward induction. In particular, we discuss an example that involves a threat that is believed in an equilibrium but does not seem credible. (from oyc.yale.edu)

Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats

Time Lecture Chapters
[00:00:00] 1. First and Second Mover Advantages: Zermelo's Theorem
[00:10:17] 2. Zermelo's Theorem: Proof
[00:17:06] 3. Zermelo's Theorem: Generalization
[00:31:20] 4. Zermelo's Theorem: Games of Induction
[00:40:27] 5. Games of Perfect Information: Definition
[01:01:56] 6. Games of Perfect Information: Economic Example

References
Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats
Instructor: Professor Ben Polak. Resources: Blackboard Notes Lecture 15 [PDF]. Transcript [html]. Audio [mp3]. Download Video [mov].

Go to the Course Home or watch other lectures:

Lecture 01 - Introduction: Five First Lessons
Lecture 02 - Putting Yourselves into Other People's Shoes
Lecture 03 - Iterative Deletion and the Median-Voter Theorem
Lecture 04 - Best Responses in Soccer and Business Partnerships
Lecture 05 - Nash Equilibrium: Bad Fashion and Bank Runs
Lecture 06 - Nash Equilibrium: Dating and Cournot
Lecture 07 - Nash Equilibrium: Shopping, Standing and Voting on a Line
Lecture 08 - Nash Equilibrium: Location, Segregation and Randomization
Lecture 09 - Mixed Strategies in Theory and Tennis
Lecture 10 - Mixed Strategies in Baseball, Dating and Paying Your Taxes
Lecture 11 - Evolutionary Stability: Cooperation, Mutation, and Equilibrium
Lecture 12 - Evolutionary Stability: Social Convention, Aggression, and Cycles
Lecture 13 - Sequential Games: Moral Hazard, Incentives, and Hungry Lions
Lecture 14 - Backward Induction: Commitment, Spies, and First-Mover Advantages
Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats
Lecture 16 - Backward Induction: Reputation and Duels
Lecture 17 - Backward Induction: Ultimatums and Bargaining
Lecture 18 - Imperfect Information: Information Sets and Sub-Game Perfection
Lecture 19 - Subgame Perfect Equilibrium: Matchmaking and Strategic Investments
Lecture 20 - Subgame Perfect Equilibrium: Wars of Attrition
Lecture 21 - Repeated Games: Cooperation vs. the End Game
Lecture 22 - Repeated Games: Cheating, Punishment, and Outsourcing
Lecture 23 - Asymmetric Information: Silence, Signaling and Suffering Education
Lecture 24 - Asymmetric Information: Auctions and the Winner's Course