Game Theory Reading
The four strategy games in Labs are small versions of problems we see in real deals. These are the books and papers we would hand you after you play them.
Start here
Two readings that set up everything else: what game theory is for, and how to use it without the math.
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R-01Book
The Art of Strategy
Avinash Dixit and Barry Nalebuff · 2008
If you read one book on this list, make it this one: sequential moves, the Prisoner’s Dilemma and mixed strategies in plain language, and the spine for every game on this page.
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R-02Essay
What Is Game Theory Trying to Accomplish?
Robert Aumann · 1985
A Nobel laureate’s short case that a theory earns its keep by what it helps you see, which is the right expectation to carry into everything else here.
Solve the Move
Find the move that changes the position, then prove it holds.
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R-03Book
Thinking, Fast and Slow
Daniel Kahneman · 2011
Every puzzle is a contest between the move that jumps out and the line you actually calculate, and this is the best account we know of why the first one feels so right and so often is not.
Nim
A game that looks like judgment and turns out to be arithmetic.
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R-04Reference
Algorithmic Game Theory
Noam Nisan, Tim Roughgarden, Éva Tardos and Vijay Vazirani, eds. · 2007
Nim is the classic case of strategy that reduces to a calculation, and this graduate reference is where that idea goes next, from computing equilibria to designing the rules of an auction; dense, so dip into chapters rather than read it cover to cover.
Cooperate or Undercut
Why cooperation can be the rational choice once the game is played more than once.
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R-05Book
The Evolution of Cooperation
Robert Axelrod · 1984
The computer tournaments behind the strategies in our game, and the clearest case for opening nice, answering an undercut, and forgiving fast.
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R-06Essays
Metamagical Themas
Douglas Hofstadter · 1985
Read the Prisoner’s Dilemma essays: Hofstadter works the payoff matrix through by hand and takes Axelrod’s results somewhere the tournament book does not, into what it means to reason like your opponent.
The Winner’s Curse
Winning a competitive bid can mean you were the most optimistic person in the room.
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R-07Book
The Winner’s Curse
Richard Thaler · 1992
The book our game is named for, and the evidence that smart, well-informed bidders overpay in common-value auctions far more often than the theory says they should.
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R-08Paper
Epsilon Theory: Viewing Capital Markets through the Lenses of Game Theory and History
Ben Hunt · 2013
An auction price reflects what bidders believe other bidders believe, not only what the business is worth, and this paper is the sharpest treatment we know of that gap between the story and the fundamentals.
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R-09Book
Noise: A Flaw in Human Judgment
Daniel Kahneman, Olivier Sibony and Cass R. Sunstein · 2021
Every bidder in our game holds a noisy estimate of the same value, and this book explains why that scatter is larger than anyone expects and what disciplined people do about it.
Think we missed one? Tell us at info@tl2advisory.com.