Undergraduate economics has just become more interesting. First we had AvinashDixit and Susan Skeath's masterful non-technical introduction to game theory, Games of Strategy (Norton, 1999). Now Joel Watson's Strategy: An Introduction to Game Theory brings succour to students weaned on Dixit and Skeath and hungry for more.
Game theory explains the structure and logic of strategic interactions, and is the mainstay of modern economic theory. Game theoretic reasoning has enormously advanced our understanding of issues ranging from parlour games to social evolution and has fundamentally altered the scope, character and central concerns of economic theory. Despite its pervasive importance, the profession has largely neglected undergraduate teaching of game theory. The books by Dixit and Skeath, and by Watson, will surely bring about a sea-change in undergraduate economics teaching.
Watson writes in a lively and lucid style, and he clarifies central concepts in the simplest possible manner without sacrificing mathematical rigour. The host of interesting examples he provides along with theory will surely remove the frustration of students neither persuaded by the explanation that tools should be learnt for their own sake, nor swayed by promises of usefulness of abstract theory in other more applied courses.
An innovative aspect of the book is the integration of contract theory, which uses game theoretic techniques to analyse institutions that develop in response to information asymmetries between parties to an exchange. This integration should prove to be a useful pedagogical device.
Every year, after my first few graduate game theory lectures, a few students ask for an easy introductory text that explains the central concepts but does not skip the maths. Finally, I have a clear answer.
Arupratan Daripa is lecturer in economics, Birkbeck College, University of London.
Strategy: An Introduction to Game Theory
Author - Joel Watson
ISBN - 0 393 97648 3
Publisher - Norton
Price - £31.00
Pages - 334