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The Complete Idiot's Guide to Game Theory by Edward Rosenthal, Ph.D., Edward C. Rosenthal

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Overcoming Individual Temptations

Individual greed and its consequences have been a repeated theme in this book. While game theory does not offer a universal solution for all such problems, it has made some headway. We have seen how to avoid, or at least blunt, the horns of the Prisoner’s Dilemma, we understand the subtleties of the Tragedy of the Commons and other social traps, and we have learned ways to defuse problems that bridge both cooperative and competitive spheres.
Before exploring games designed to draw out honest revelations from players, it’s important to understand a bit more about some subtle dangers that threaten to derail many social and economic situations.

Adverse Selection

In Chapter 7 I worked through the logic of buying ...

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