Game Theory & Behavior

This book provides a clear and accessible formal introduction to standard game theory, while at the same time addressing how people actually behave in these games and demonstrating how the standard theory can be expanded or updated to better predict the behavior of real people. Our objective is to simultaneously provide students with both the theoretical tools to analyze situations through the logic of game theory and the intuition and behavioral insights to apply these tools to real world situations. The book was written to serve as the primary textbook in a first course in game theory at the undergraduate level and does not assume students have any previous exposure to game theory or economics. However, the book may also be a useful resource for graduate students or researchers who are looking for a synthesis of behavioral research or a concise introduction to some of the advanced topics covered, such as cooperative game theory, matching market design, social dilemmas, voting games, quantal response equilibrium, level-k reasoning or psychological game theory.

Most chapters follow the same basic format: We begin each chapter with a motivating game, which sets up the topic. The reader is then asked what they should (or would) do in this situation. We provide protocols and supplementary materials for instructors who want to run the motivating game for each chapter as an experiment during class, enabling students to learn experientially and build their intuition before diving in. From there, the chapter provides a traditional game theoretic analysis of these types of games. We then present data from similar lab experiments, discuss when the predictions are likely to hold, and summarize the main behavioral insights. But, to the extent that behavior deviates from the predictions, we emphasize that this is not the end of the story and doesn't imply that we should give up on game theory as a framework for understanding strategic interactions. Instead, we explain how these insights about human behavior have been woven back into the theory to better predict behavior of real people, for example using social preference models, quantal response equilibrium, level-k reasoning, cursed equilibrium, and so on. The goal is to demonstrate that a positive treatment of game theory, one that stresses the iterative process of advancing theory and gathering data, leads to more accurate predictions.

Endorsements:

“This is a rare and important gem: A comprehensive game theory book which expertly centers experimental results and ‘evidence-based adaptations,’ showing how data have extended standard theory to create something new and better. It richly deserves consideration as the modern text.”

—Colin F. Camerer, Robert Kirby Professor of Behavioral Economics, Caltech

“Carpenter and Robbett provide a lucid and comprehensive introduction to game theory. The book uniquely combines formal mathematical models and related experimental evidence. It provides clear insights not only on how individuals should, theoretically, behave in strategic interactions, but also on how they actually behave. Despite its technical nature, the book is written in a remarkably accessible style that will surely be a hit with students anywhere.”

—Leeat Yariv, Uwe E. Reinhardt Professor of Economics, Princeton University

“In Game Theory and Behavior, two veteran experimental economists introduce how the theory of rational behavior compares to observations of actual behavior in an exciting and accessible introduction to game theory and experiments.”

—Alvin E. Roth, Craig and Susan McCaw Professor of Economics, Stanford University; recipient of the 2012 Nobel Memorial Prize in Economics

“Game Theory and Behavior is an excellent undergraduate textbook that presents game theoretic concepts in an intuitive, yet precise, way. It goes beyond previous textbooks by showing how the interaction between theory and experimental evidence advances our knowledge about actual human behavior and motivation.”

—Ernst Fehr, Professor of Economics, University of Zurich