GAME THEORY: AN INTRODUCTION

Abstract

AbstractAs noted more than once, classical and neoclassical economics live and die by the isolation of the supra-rational Economic Man within the confines of perfect competition. If every buyer and every seller is so small compared with the size of the relevant markets, nobody can significantly affect market prices by his or her actions. Then, when a firm or individual buys inputs (including labor) or buys finished goods and services, all prices are essentially given to the economic agent. Suppose you go shopping for a new Buick: GM dealers will offer you only one price, the same price that the dealers offer to everyone else. There is no room for negotiation. This makes the choice of inputs and of outputs a one-person simple maximization problem, which can be solved with the choice-theoretics laid down by Paul Samuelson in his Foundations. The Economic Man remains in an isolation booth that precludes any kind of social interaction…

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