**Description:**

**Comprehensive, clear, and
approachable, with clever real-world examples that motivate students**

*Games of Strategy* is beloved by students and instructors alike for its flexible
organization, focus on problem-solving, and engaging and accessible examples
from diverse fields, like political science, biology, and business. The
completely revised Fifth Edition adds the work of David McAdams, especially in
the areas of market design and auction theory, and provides new insights into
diverse applications, such as billion-dollar buy-outs, job offer negotiation,
the Cuban Missile Crisis, and collusion in the school milk market.

__Features:__

**Relevant and relatable examples
and cases engage students**

*Games of Strategy*, Fifth Edition, has the most engaging, student-oriented examples
on the market. Students explore a variety of topics, such as how Congress and
the Federal Reserve interact when setting fiscal and monetary policy, what we
can learn from data gathered by Wimbeldon’s new ball tracking system “Hawkeye,”
and side-blotched lizards in California. Students can also delve into issues
concerning student life, such as grade inflation and why roommates wait for the
other to buy the common items (soap, ketchup, etc.) and, therefore, why they
always run out.

**Reflects the latest research,
especially insights in auction theory and market design**

The Fifth Edition has been
thoroughly updated to include examples of the latest research, highlighting new
applications in business, medicine, and day-to-day interactions.

**Revised problems that provide
engaging assignments for student practice**

*Games of Strategy* helps students apply what they have learned to problems in the
real world. This text has always had an engaging selection of problems for
instructors to use, including some with solutions provided for students. The
new edition continues with problems based on new applications.

**Contents:**

Preface

__Part One: Introduction and General Principles__

**Chapter 1: Basic Ideas and Examples
**• What is a Game of Strategy? • Some Examples and Stories of
Strategic Games • Which Passing Shot? • The GPA Rat Race • “We Can’t Take the
Exam because We Had a Flat Tire” • Why Are Professors So Mean? • Roommates and
Families on the Brink • The Dating Game • Our Strategy for Studying Games of
Strategy

**Chapter 2: How to Think about
Strategic Games** • Strategic Games • Classifying
Games • Are Players’ Interests in Total Alignment, Total Conflict, or a Mix of
Both? • Are the Moves in the Game Sequential or Simultaneous? • Are the Rules
of the Game Fixed or Manipulable? • Do the Players Have Full or Equal
Information? • Is the Game Played Once or Repeatedly, and with the Same or
Changing Opponents? • Are Agreements to Cooperate Enforceable? • Some Terminology
and Background Assumptions • Strategies • Payoffs • Rationality • Common
Knowledge of Rules • Equilibrium • Dynamics and Evolutionary Games •
Observation and Experiment • The Uses of Game Theory • The Structure of the
Chapters to Follow • Summary • Key Terms • Exercises

__Part Two: Fundamental Concepts and Techniques__

**Chapter 3: Games with Sequential
Moves **• Game trees • Nodes, Branches, and Paths of
Play • Uncertainty and “Nature’s Moves” • Outcomes and Payoffs • Strategies •
Tree Construction • Solving Games By Using Trees • Adding More Players’ • Order
Advantages • Adding More Moves” • Tic-Tac-Toe • Checkers • Chess • Go •
Evidence Concerning Rollback • Summary • Key Terms • Exercises

**Chapter 4: Simultaneous-Move
Games - Discrete Strategies** • Depicting Simultaneous-Move
Games With Discrete Strategies • Nash Equilibrium • Some Further Explanation of
the Concept of Nash Equilibrium • Nash Equilibrium as a System of Beliefs and
Choices • Dominance • Both Players Have Dominant Strategies • One Player Has a
Dominant Strategy • Successive Elimination of Dominated Strategies • Stronger
and Weaker Forms of Dominance • Superdominance • Weak Dominance • Best-Response
Analysis • Identifying Best Responses • Ordinal Payoffs • Three Players •
Multiple Equilibria in Pure Strategies’ • Pure Coordination: Will Holmes Meet
Watson? • Assurance: Will Holmes Meet Watson? And Where? • Battle of the Sexes:
Will Holmes Meet Watson? And Where? • Chicken: Will James Meet Dean? • No
Equilibrium in Pure Strategies • Summary • Key Terms • Exercises

**Chapter 5: Simultaneous-Move
Games - Continuous Strategies, Discussion, and Evidence** • Pure Strategies That Are Continuous Variables • Price
Competition • Some Economics of Oligopoly • Political Campaign Advertising •
General Method for Finding Nash Equilibria • Critical Discussion of the Nash
Equilibrium Concept • The Treatment of Risk in Nash Equilibrium • Multiplicity
of Nash Equilibria • Requirements of Rationality for Nash Equilibrium •
Rationalizability • Applying the Concept of Rationalizability •
Rationalizability Can Take Us All the Way to Nash Equilibrium • Empirical
Evidence Concerning Nash Equilibrium • Laboratory Experiments • Real-World
Evidence • Summary • Key Terms • Exercises • Appendix: Finding a Value to
Maximize a Function

**Chapter 6: Combining Sequential
and Simultaneous Moves** • Games With Both Simultaneous
And Sequential Moves • Two-Stage Games and Subgames • Configurations of
Multistage Games • Changing the Order of Moves in a Game • What Determines the
Order of Moves? • Moving First versus Moving Second • How One Player Can Change
the Order of Moves • Alternative Method of Analysis • Illustrating
Simultaneous-Move Games Using Game Trees • Showing and Analyzing
Sequential-Move Games Using Game Tables • Three-Player Games • Summary • Key
Terms • Exercises

**Chapter 7: Simultaneous-Move
Games: Mixed Strategies** • What is a Mixed Strategy?
• Mixing Moves • The Benefit of Mixing • Best Responses and Equilibrium • Nash
Equilibrium as a System of Beliefs and Responses • Mixing in Non-Zero-Sum Games
• Will Holmes Meet Watson? Assurance, Pure Coordination, and Battle of the
Sexes • WillJames Meet Dean? Chicken • General Discussion Of Mixed-Strategy
Equilibria • Weak Sense of Equilibrium • Counterintuitive Changes in Mixture
Probabilities with Changes in Payoffs • Risky and Safe Choices in Zero-Sum
Games • Mixing When One Player Has Three or More Pure Strategies • A General
Case • Exceptional Cases • Mixing When Both Players Have Three Strategies •
Full Mixtures of All Strategies • Equilibrium Mixtures with Some Strategies
Unused • How to Use Mixed Strategies in Practice • Evidence on Mixing •
Zero-Sum Games • Non-Zero-Sum Games • Summary • Key Terms • Exercises •
Appendix: Working with Probabilities • The Basic Algebra of Probabilities • The
Addition Rule • The Multiplication Rule • Expected Values • Summary • Key Terms

__Part Three: Some Broad Classes of Strategies and Games__

**Chapter 8: Strategic Moves **• A Classification of Strategic Moves • Unconditional Strategic
Moves • The Role of Feasibility, Framing, and Credibility • Commitments •
Threats and Promises • Making of a Threat: U.S.-Japan Trade Relations • Making
of a Promise: The Restaurant Pricing Game • Making a Combined Threat and
Promise: Joint U.S.-China Political Action • Some Additional Topics • When Do
Strategic Moves Help? • Deterrence versus Compellence • Making Your Strategic
Moves Credible • Reduce Your Freedom of Action • Change Your Payoffs •
Countering Your Opponent’s Strategic Moves • Appear Irrational • Cut Off
Communication • Leave Escape Routes Open • Undermine Your Opponent’s Motive to
Uphold His Reputation • Use Salami Tactics • Summary • Key Terms • Exercises

**Chapter 9: Uncertainty and
Information** • Strategies for Dealing With Risk • Sharing
of Risk • Paying to Reduce Risk • Manipulating Risk in Contests • Asymmetric
Information: Basic Ideas • Direct Communication, or “Cheap Talk” • Perfectly
Aligned Interests • Totally Conflicting Interests • Partially Aligned Interests
• Adverse Selection, Signaling, and Screening • Adverse Selection and Market
Failure • The Market for “Lemons” • Signaling and Screening: Sample Situations
• Experimental Evidence • Signaling in the Labor Market • Screening to Separate
Types • Pooling of Types • Many Types • Equilibria in Two-Player Signaling
Games • Basic Model and Payoff Structure • Separating Equilibrium • Pooling
Equilibrium • Semiseparating Equilibrium • Two-Way Asymmetric Information and
Dynamic Chicken • Two-way Asymmetric Information in Chicken • Two-Way
Asymmetric Information in a Large Population • Dynamic Chicken: Wars of
Attrition and Brinkmanship • Summary • Key Terms • Exercises • Appendix:
Inferring Probabilities from Observing Consequences

**Chapter 10: The Prisoners’
Dilemma and Repeated Games **• The Basic Game (Review) •
Changing the Way Moves Are Made: Repetition • Finite Repetition • Infinite
Repetition • Games of Unknown Length • General Theory • Changing the Order of
Moves: Promises • Changing Payoffs: Penalties and Rewards • Changing Payoffs:
Leadership • Experimental Evidence • Real-World Dilemmas • Evolutionary Biology
• Price Matching • International Environmental Policy • Summary • Key Terms •
Exercises • Appendix: Infinite Sums

**Chapter 11: Collective-Action
Games** • Collective-Action Games With Two Players • Collective Action as
a Prisoners’ Dilemma • Collective Action as Chicken • Collective Action as
Assurance • Collective Inaction • Collective-Action Problems in Large Groups •
Multiplayer Prisoners’ Dilemma • Multiplayer Chicken • Multiplayer Assurance •
Spillover Effects, Or Externalities • Commuting and Spillover Effects •
Spillover Effects: The General Case • Commuting Revisited: Negative
Externalities • Positive Spillover Effects • A Brief History of Ideas • The
Classics • Modern Approaches and Solutions • Applications • “Help!”: A Game Of
Chicken With Mixed Strategies • Summary • Key Terms • Exercises

**Chapter 12: Evolutionary Games** • The Framework • Some Classic Games in an Evolutionary Setting •
Prisoners’ Dilemma • Comparing the Evolutionary and Rational-Player Models •
Chicken • Assurance • Soccer Penalty Kicks • Multiplayer Evolutionary Games •
The Repeated Prisoners Dilemma • Twice-Repeated Play • Threefold Repetition •
Multiple Repetitions • The Hawk-Dove Game • Rational Strategic Choice and
Equilibrium • Evolutionary Stability for V>C • Evolutionary Stability for
V<C • V<C: Stable Polymorphic Population • V<C: Each Player Mixes
Strategies • Some General Theory • Evolution of Cooperation and Altruism •
Summary • Key Terms • Exercises

__Part Four: Applications to Specific Strategic Situations__

**Chapter 13: Brinkmanship - The
Cuban Missile Crisis** • A Brief Narrative of Events •
A Simple Game-Theoretic Explanation • Brinkmanship With Well-Controlled Risk •
When Is a Simple Threat Too Large? • The Probabilistic Threat • Brinkmanship
With Uncontrolled Risk: A Game of Dynamic Chicken • Practicing Brinkmanship •
Summary • Key Terms • Exercises

**Chapter 14: Design of Incentives **• Price Discrimination • Some Terminology • Information-Revealing
Contracts • Highway Construction: Full Information • Highway Construction:
Asymmetric Information • Evidence Concerning Information-Revelation Mechanisms
• Incentives for Effort: The Simplest Case • Managerial Supervision • Insurance
Provision • Incentives for Effort: Evidence and Extensions • Nonlinear
Incentive Schemes • Incentives in Teams • Multiple Tasks and Outcomes •
Incentives over Time • Summary • Key Terms • Exercises

**Chapter 15: Auctions, Bidding
Strategy, and Auction Design** • What Are Auctions? • More
Than Just Buying and Selling • Auction Formats • Information in Auctions • The
Winner’s Curse • Bidding in Auctions • Ascending-Price (“English”) Auction •
Descending-Price (“Dutch”) Auction • First-Price Auction • Second-Price Auction
• All-Pay Auction • War of Attrition • Auction Design • Reserve Prices • Bidder
Attitudes Toward Risk • Common Values and Correlated Estimates • Incorrect
Beliefs about the Game • Collusion • Further Reading • Summary • Key Terms •
Exercises • Appendix: Computing Bidding Equilibria • Math Facts • Second-Price
Auction Revenue with Any Reserve • Optimal Reserve Price • Equilibrium Bidding
Strategies in the First-Price Auction • Equilibrium Bidding Strategies in the
All-Pay Auction

**Chapter 16: Strategy and Voting** • Voting Rules and Procedures • Binary Methods • Plurative
Methods • Mixed Methods • Voting Paradoxes • The Condorcet Paradox • The Agenda
Paradox • The Reversal Paradox • Change the Voting Method, Change the Outcome •
Evaluating Voting Systems • Black’s Condition • Robustness • Intensity Ranking
• Strategic Voting • Plurality Rule • Pairwise Voting • Strategic Voting with
Incomplete Information • Scope for Strategic Voting • The Median Voter Theorem
• Discrete Political Spectrum • Continuous Political Spectrum • Summary • Key
Terms’ • Exercises •

**Chapter 17: Bargaining** • The Nash Cooperative Solution • Numerical Example • General
Theory • Variable-Threat Bargaining • Alternating-Offers Model I: Total Value
Decays • Alternating-Offers Model II: Impatience • Experimental Evidence •
Manipulating Information in Bargaining • Bargaining With Many Parties and
Issues • Multi-Issue Bargaining • Multiparty Bargaining • Summary • Key Terms •
Exercises

**Glossary**

**Index**

**About the Authors:**

**Avinash K. Dixit** is Emeritus John J.F. Sherrerd University Professor of Economics
at Princeton University, where he offered his popular freshman course in game
theory. He is among the world’s leading economists, having made fundamental
contributions in several major fields as well as in game theory. He is the
author of many books, including Dixit/Nalebuff: *Thinking Strategically*
(Norton, 1991), Dixit/Pindyck: *Investment Under Uncertainty* (Princeton
University Press, 1994), and Dixit/Nalebuff: *The Art of Strategy*
(Norton, 2009).

**Susan Skeath** is Professor of Economics at Wellesley College, where she teaches
a number of courses in microeconomics and a course in game theory, which she
introduced into the school’s curriculum. She conducts research in international
trade theory, and is currently working on a new Intermediate Microeconomics
text with her colleague Ann Velenchik. Professor Skeath earned her doctorate at
Princeton University.

**David McAdams** is a professor at the Duke University Fuqua School of Business.
He is a leading scholar, popular teacher, and game-theory business consultant.
He lives with his wife and children in Durham, North Carolina.

**Target Audience:**

This book is intended for under graduate economics students and
academicians.