Strategy and Game Theory
Practice Exercises with Answers

Authors: Felix Munoz-Garcia, Daniel Toro-Gonzalez



Provides over ninety worked-out exercises on game theory with detailed step-by-step explanations

Emphasizes the economic principles behind each exercise and avoids unnecessary complex notation

Helps undergraduate and master’s level students  understand  equilibrium behavior in strategic settings

Ranks exercises according to difficulty for self-guided study

This textbook presents worked-out exercises on game theory with detailed step-by-step explanations. While most textbooks on game theory focus on theoretical results, this book focuses on providing practical examples in which students can learn to systematically apply theoretical solution concepts to different fields of economics and business. The text initially presents games that are required in most courses at the undergraduate level and gradually advances to more challenging games appropriate for masters level courses. The first six chapters cover complete-information games, separately analyzing simultaneous-move and sequential-move games, with applications in industrial economics, law, and regulation. Subsequent chapters dedicate special attention to incomplete information games, such as signaling games, cheap talk games, and equilibrium refinements, emphasizing common steps and including graphical illustrations to focus students’ attention on the most relevant payoff comparisons at each point of the analysis.  In addition, exercises are ranked according to their difficulty, with a letter (A-C) next to the exercise number. This allows students to pace their studies and instructors to structure their classes accordingly. By providing detailed worked-out examples, this text gives students at various levels the tools they need to apply the tenets of game theory in many fields of business and economics. This text is appropriate for introductory-to-intermediate courses in game theory at the upper undergraduate and master’s level.  

Table of contents

Front Matter
Pages i-xii

Dominance Solvable Games
Pages 1-23

Pure Strategy Nash Equilibrium and Simultaneous-Move Games with Complete Information
Pages 25-60

Mixed Strategies, Strictly Competitive Games, and Correlated Equilibria
Pages 61-106

Sequential-Move Games with Complete Information
Pages 107-143

Applications to Industrial Organization
Pages 145-181

Repeated Games and Correlated Equilibria
Pages 183-215

Simultaneous-Move Games with Incomplete Information
Pages 217-236

Auctions
Pages 237-255

Perfect Bayesian Equilibrium and Signaling Games
Pages 257-302

More Advanced Signaling Games
Pages 303-341

Back Matter
Pages 343-345

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