The Search for Equilibrium Concepts

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Abstract

Game Theory is about predicting the behavior of groups of rational agents whose decisions affect each other’s welfare, and such predictions are most often in the form of equilibrium concepts. There are several desiderata one might expect from an equilibrium concept: First and foremost it should be natural and convincing as a prediction of agent behavior. Then it should be universal — all games should have it, because otherwise it is an incomplete prediction. Since computer scientists became interested in Game Theory over the past decade, prompted by the advent of the Internet and its complex socioeconomic platform, another important question has been asked of an equilibrium concept: Can it be computed efficiently? Intractability makes an equilibrium concept problematic.