Handbook of Game Theory with Economic Applications (Volume 2) (Handbooks in Economics)

This is the second of three volumes surveying the state of the art in Game Theory and its applications to many and varied fields, in particular to economics. The chapters in the present volume are contributed by outstanding authorities, and provide comprehensive coverage and precise statements of the main results in each area. The applications include empirical evidence. The following topics are covered: communication and correlated equilibria, coalitional games and coalition structures, utility and subjective probability, common knowledge, bargaining, zero-sum games, differential games, and applications of game theory to signalling, moral hazard, search, evolutionary biology, international relations, voting procedures, social choice, public economics, politics, and cost allocation. This handbook will be of interest to scholars in economics, political science, psychology, mathematics and biology. For more information on the Handbooks in Economics series, please see our home page on http: //(http://www.elsevier.nl/locate/hes) www.elsevier.nl/locate/hes Content: Introduction to the series Page v Kenneth J. Arrow, Michael D. Intriligator Contents of the handbook Pages vii-xiii Preface Pages xv-xvii Robert J. Aumann, Sergiu Hart Chapter 20 Zero-sum two-person games Review Article Pages 735-768 T.E.S. Raghavan Chapter 21 Game theory and statistics Review Article Pages 769-779 Gideon Schwarz Chapter 22 Differential games Review Article Pages 781-799 Avner Friedman Chapter 23 Differential games — Economic applications Review Article Pages 801-825 Simone Clemhout, Henry Y. Wan Jr. Chapter 24 Communication, correlated equilibria and incentive compatibility Review Article Pages 827-847 Roger B. Myerson Chapter 25 Signalling Review Article Pages 849-867 David M. Kreps, Joel Sobel Chapter 26 Moral hazard Review Article Pages 869-903 Prajit K. Dutta, Roy Radner Chapter 27 Search Review Article Pages 905-927 John McMillan, Michael Rothschild Chapter 28 Game theory and evolutionary biology Review Article Pages 929-993 Peter Hammerstein, Reinhard Selten Chapter 29 Game theory models of peace and war Review Article Pages 995-1053 Barry O'Neill Chapter 30 Voting procedures Review Article Pages 1055-1089 Steven J. Brams Chapter 31 Social choice Review Article Pages 1091-1125 Hervé Moulin Chapter 32 Power and stability in politics Review Article Pages 1127-1151 Philip D. Straffin Jr. Chapter 33 Game theory and public economics Review Article Pages 1153-1192 Mordecai Kurz Chapter 34 Cost allocation Review Article Pages 1193-1235 H.P. Young Chapter 35 Cooperative models of bargaining Review Article Pages 1237-1284 William Thomson Chapter 36 Games in coalitional form Review Article Pages 1285-1303 Robert J. Weber Chapter 37 Coalition structures Review Article Pages 1305-1337 Joseph Greenberg Chapter 38 Game-theoretic aspects of computing Review Article Pages 1339-1395 Nathan Linial Chapter 39 Utility and subjective probability Review Article Pages 1397-1435 Peter C. Fishburn Chapter 40 Common knowledge Review Article Pages 1437-1496 John Geanakoplos Index Pages 1497-1520

This is the first volume of the Handbook of Game Theory with Economic Applications, to be followed by two additional volumes. Game Theory has developed greatly in the last decade, and today it is an essential tool in much of economic theory. The three volumes will cover the fundamental theoretical aspects, a wide range of applications to economics, several chapters on applications to political science, and individual chapters on relations with other disciplines. The topics covered in the present volume include chess-playing computers, an introduction to the non-cooperative theory, repeated games, bargaining theory, auctions, location, entry deterrence, patents, the cooperative theory and its applications, and the relation between Game Theory and ethics. For more information on the Handbooks in Economics series, please see our home page on http://www.elsevier.nl/locate/hes

This is the third volume of the Handbook of Game Theory with Economic Applications. Since the publication of multi-Volume 1 a decade ago, game theory has continued to develop at a furious pace, and today it is the dominant tool in economic theory. The three volumes together cover the fundamental theoretical aspects, a wide range of applications to economics, several chapters on applications to political science and individual chapters on applications to disciplines as diverse as evolutionary biology, computer science, law, psychology and ethics. The authors are the most eminent practitioners in the field, including three Nobel Prize winners.

The topics covered in the present volume include strategic ("Nash") equilibrium; incomplete information; two-person non-zero-sum games; noncooperative games with a continuum of players; stochastic games; industrial organization; bargaining, inspection; economic history; the Shapley value and its applications to perfectly competitive economies, to taxation, to public goods and to fixed prices; political science; law mechanism design; and game experimentation

Many parlor games like the game of "Le Her" or "Morra" [Dresher (1963)], involve just two players and finitely many moves for the players.