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Written in a conversational tone, this classroom-tested text introduces the fundamentals of linear programming and game theory, showing readers how to apply serious mathematics to practical real-life questions by modelling linear optimization problems and strategic games. The treatment of linear programming includes two distinct graphical methods. The game theory chapters include a novel proof of the minimax theorem for 2x2 zero-sum games. In addition to zero-sum games, the text presents variable-sum games, ordinal games, and n-player games as the natural result of relaxing or modifying the assumptions of zero-sum games. All concepts and techniques are derived from motivating examples, building in complexity, which encourages students to think creatively and leads them to understand how the mathematics is applied. With no prerequisite besides high school algebra, the text will be useful to motivated high school students and undergraduates studying business, economics, mathematics, and the social sciences.
In this chapter, we vary the assumptions under which we play a game, so the chapter can be regarded as a sort of sensitvity analysis of game theory. We illustrate reverse induction to solve games of perfect information if play is sequential rather than simultaneous. We also consider changes such as what happens if the players are allowed to communicate with each other or if your opponent is indifferent (such as nature) as opposed to a rational player. We consider ordinal games (where the outcomes are just ranked in order of preference rather than having numerical payoffs).Here is where we cover the famous dilemmas of game theory, such as the prisoner's dilemma, and discuss applications to politics and international relations (the arms race, the Cuban Missile Crisis, and federal government shutdowns due to budget gaps). We discuss the theory of moves, proposed by Brams in 1994 as a way of making ordinal game models more realistic, and offer our own small adjustment to this theory. We conclude the chapter with brief mention of n-person games and discuss games in characeristic function form. Examples include legislative voting systems, where we introduce power indices.
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