Economics and Game Theory

Making optimal use of scarce resources is the central theme of economics; constrained optimization lies at the heart of many economic applications. Roger Myerson (Game Theory: Analysis of Conflict, Harvard University Press, 1991) defines game theory as “the study of mathematical models of conflict and cooperation between intelligent rational decision-makers”; optimization theory plays an important role in analyzing strategic decision making. The case studies in this collection introduce some of the basic models in economics and in game theory and highlight the optimization formulation and solution of the models. Applets are included for the user to gain insight into the workings of the models.