Category: Game Theory

A Game Theory Application: Is Donald Trump Actually Crazy?
This is a part of my Game Theory Series. I have several equity analyses in the works, but it’s fun to spin the brain in a different direction. Please let me know if you have any questions or comments! There are mixed views about the President, but he tweets enough content to fuel several blog […]

Grim Trigger Strategy: How Many Boats Should We Send?
Let’s say that there are three fishermen, and each day they individually decide how many boats to send out to catch fish in the local lake. A fisherman can send out one or two boats, and the daily cost of a boat is $15. The more boats sent out, the more fish are caught. However, […]

How Do You Induce Cooperation?
Consider the infinitely repeated version of the symmetric twoplayer stage game below. The first number in a cell is player 1’s singleperiod payoff. Suppose the stage game is repeated three times and each player’s payoff is the sum of the singleperiod payoffs. Assume that past actions are common knowledge.

Infinite Games: Comparing the Combination of The Value of Defecting + The Value of Loss
Consider the infinitely repeated version of the symmetric twoplayer stage game in the following figure. The first number in a cell is player 1’s single period payoff. The second number in a cell is player 2’s single period payoff.

Stacks of Cash: A Game Theory Application of What To Do When A Credit Card Reader Breaks
Everyone always tells you to carry cash. My dad has drilled that into me and my brother since we were young, and it’s proven correct more times than once. However, I still never carry cash. The cost of going to the ATM, getting cash out, and then actually carrying a wallet is simply too high […]