Game Theory and Public Policy, SECOND EDITION
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Game Theory and Public Policy, SECOND EDITION

Roger A. McCain

This book provides a critical, selective review of concepts from game theory and their applications in public policy, and further suggests some modifications for some of the models (chiefly in cooperative game theory) to improve their applicability to economics and public policy.
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Chapter 2: Representing games

Roger A. McCain


The first step in any application of game theory, whether to public policy or for any other purpose, is to represent the real-world phenomenon of interest as a problem of interactive decision, that is, a “game.” This chapter will set out some forms for representation of games that will be important for the remainder of the book. Some will be familiar, even pedestrian, to the reader who is well grounded in game theory. Nevertheless some topics may be important for the game theorist, if only for differences of stress. Contingent strategies are well known, but this book will often make them more explicit and formal than they often are in the game theory literature. Nested games may be a novel topic to the game theorist, as the concept comes from applications in political science, and are crucial to the distinction of a private from a public sector. “Imperfect recall” is very little mentioned in recent game theory, and needs to be discussed in the context of cooperative game theory. Finally, the discussion of externalities in cooperative game theory may be novel to some game theorists. These are important concepts for public policy. Nevertheless, the chapter is expository, with nothing new to the literature except specific examples, some terminology, emphasis and expression.

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