Lecture 5 - Nash Equilibrium: Bad Fashion and Bank Runs

Lecture 5 - Nash Equilibrium: Bad Fashion and Bank Runs

Author: William Sheppard June 3, 2018 Duration: 1:09:13
We first define formally the new concept from last time: Nash equilibrium. Then we discuss why we might be interested in Nash equilibrium and how we might find Nash equilibrium in various games. As an example, we play a class investment game to illustrate that there can be many equilibria in social settings, and that societies can fail to coordinate at all or may coordinate on a bad equilibrium. We argue that coordination problems are common in the real world. Finally, we discuss why in such coordination problems–unlike in prisoners’ dilemmas–simply communicating may be a remedy.

Ever wondered how the strategies behind a high-stakes poker game, a political campaign, and a corporate merger might actually be connected? Yale Open Courses ECON 159: Game Theory, presented by William Sheppard, pulls back the curtain on the fascinating science of strategic decision-making. This isn't just an academic lecture series; it's a deep dive into the frameworks that explain how we interact when our choices directly impact others. Each episode unpacks core concepts-from Nash equilibrium and backward induction to credibility and signaling-using clear explanations that make these powerful ideas accessible. You’ll hear these theories brought to life through engaging examples that stretch far beyond textbook economics. Discussions might pivot from classic parlor games to analysis drawn from film narratives, historical events, and current political dilemmas, showing just how pervasive strategic thinking is in our world. The content is drawn directly from the renowned Yale College course, capturing the dynamic atmosphere of a campus classroom. For anyone curious about the hidden rules of competition and cooperation in everyday life, this podcast serves as a compelling guide. Tune in to train your mind to see the strategic layers in everything from simple interactions to complex global systems.
Author: Language: English Episodes: 24

Yale Open Courses ECON 159: Game Theory
Podcast Episodes
Lecture 3 - Iterative Deletion and the Median-Voter Theorem [not-audio_url] [/not-audio_url]

Duration: 1:01:19
We apply the main idea from last time, iterative deletion of dominated strategies, to analyze an election where candidates can choose their policy positions. We then consider how good is this classic model as a descripti…
Lecture 2 - Putting Yourselves into Other People's Shoes [not-audio_url] [/not-audio_url]

Duration: 1:08:48
At the start of the lecture, we introduce the “formal ingredients” of a game: the players, their strategies and their payoffs. Then we return to the main lessons from last time: not playing a dominated strategy; and putt…
Introduction: Five First Lessons [not-audio_url] [/not-audio_url]

Duration: 1:08:32
We introduce Game Theory by playing a game. We organize the game into players, their strategies, and their goals or payoffs; and we learn that we should decide what our goals are before we make choices. With some plausib…