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Game Theory and Strategic Complexity

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Encyclopedia of Complexity and Systems Science

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Definition

The subject of this entry is at the intersection of economics and computer science and deals with the use of measures of complexity obtained from the study of finite automata to help select among multiple equilibria and other outcomes appearing in game-theoretic models of bargaining, markets, and repeated interactions. The importance of the topic lies in the ability of concepts that employ bounds on available resources to generate more refined predictions of individual behavior in markets.

Introduction

This entry is concerned with the concept of strategic complexity and its use in game theory. There are many different meanings associated with the word “complexity,” as the variety of topics discussed in this volume makes clear. In this entry, we shall adopt a somewhat narrow view, confining ourselves to notions that measure, in some way, constraints on the ability of economic agents to behave with full rationality in their interactions with other agents in dynamic...

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Abbreviations

Automata:

A formal definition of a strategy that captures its complexity.

Continuation Game:

A description of how the play will proceed in a dynamic game once some part of the game has already occurred.

Equilibrium:

A solution concept for games in which each player optimizes given his correct prediction of others’ behavior.

Equilibrium Path:

The outcome in terms of the play of the game if every player uses his equilibrium strategy.

Game Theory:

A formal model of interaction, usually in human behavior.

Repeated Games:

A series of identical interactions of this kind.

Strategic Complexity:

A measure of how complex a strategy is to implement.

Strategy:

A complete specification of how a player will play the game.

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Acknowledgments

We wish to thank an anonymous referee and Jihong Lee for valuable comments that improved the exposition of this entry. We would also like to thank St. John’s College, Cambridge, and the Pennsylvania State University for funding Dr. Chatterjee’s stay in Cambridge at the time this entry was written.

Author information

Authors and Affiliations

  1. Department of Economics, The Pennsylvania State University, University Park, USA

    Kalyan Chatterjee

  2. Faculty of Economics, University of Cambridge, Cambridge, UK

    Hamid Sabourian

Authors
  1. Kalyan Chatterjee
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  2. Hamid Sabourian
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Correspondence to Kalyan Chatterjee .

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Editors and Affiliations

  1. Ramtech Ltd., Larkspur, California, USA

    Robert A. Meyers

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Chatterjee, K., Sabourian, H. (2013). Game Theory and Strategic Complexity. In: Meyers, R. (eds) Encyclopedia of Complexity and Systems Science. Springer, New York, NY. https://doi.org/10.1007/978-3-642-27737-5_241-3

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  • DOI: https://doi.org/10.1007/978-3-642-27737-5_241-3

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