Book contents
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Games of skill
- 3 Games of chance
- 4 Sequential decision making and cooperative games of strategy
- 5 Two-person zero-sum games of strategy
- 6 Two-person mixed-motive games of strategy
- 7 Repeated games
- 8 Multi-person games, coalitions and power
- 9 A critique of game theory
- Appendix A Proof of the minimax theorem
- Appendix B Proof of Bayes's theorem
- Bibiliography
- Index
4 - Sequential decision making and cooperative games of strategy
Published online by Cambridge University Press: 02 December 2009
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Games of skill
- 3 Games of chance
- 4 Sequential decision making and cooperative games of strategy
- 5 Two-person zero-sum games of strategy
- 6 Two-person mixed-motive games of strategy
- 7 Repeated games
- 8 Multi-person games, coalitions and power
- 9 A critique of game theory
- Appendix A Proof of the minimax theorem
- Appendix B Proof of Bayes's theorem
- Bibiliography
- Index
Summary
A wrong decision isn't forever; it can always be reversed. But the losses from a delayed decision can never be retrieved.
J.K. Galbraith 1981 ‘A Life in our Times’To make a decision is to choose a course of action, whether in a game of skill, chance or strategy. Multiple decisions are sometimes taken simultaneously and sometimes sequentially, usually irrespective of the nature of the game, although games of skill are necessarily sequential since they involve only one player who has complete control over all the outcomes. Simultaneous decision making itself is relatively simple, although resolving the ensuing game may be difficult. Sequential decision making, on the other hand, can be very complex and certain techniques have been developed to represent the process.
This chapter considers sequential decision making in all its forms and develops the terminology used to describe directed graphs and decision making trees. The method of backward induction is illustrated by example and sequential decision making in single- and multi-player games are thus explored. The differing concepts of a priori and a posteriori probabilities are developed from a consideration of sequential decision making involving uncertainty, and Bayes's formula is used to illustrate these differences in action. The chapter concludes with a discussion on purely cooperative two-person games and the minimal social situation, which (being games without conflict) are interesting only for their decision making processes.
- Type
- Chapter
- Information
- Decision Making Using Game TheoryAn Introduction for Managers, pp. 48 - 76Publisher: Cambridge University PressPrint publication year: 2003