Game-theoretic models

Abstract

Game theory is a tool to model and discover social mechanisms. The aim of this chapter is to show how the tool can be used by engaging the reader's interest in the game-theoretic modelling of social dilemmas. Social dilemmas are situations in which several agents face a decision conflict because of their interdependence. The chapter uses examples to connect game-theoretic models with everyday life occurrences of social dilemmas. In the three sections after the introduction, the chapter shows how game theory can be used to describe interaction situations to which cooperation problems, coordination problems, and conflicts of interest are inherent. Throughout the chapter, it is discussed how social, legal, and organizational mechanisms can help to mitigate or resolve social dilemmas. The two sections before the summary touch upon the game-theoretic modelling of agents' repeated encounters in social dilemmas and social dilemmas characterized by an asymmetric distribution of information among agents.