This module deepens your understanding of Nash equilibrium through a wider range of examples, including the Prisoner’s Dilemma, coordination games, market competition, auctions, and sports. You will examine why people may play Nash equilibrium, when rationality alone is sufficient, and when communication, learning, or repeated adjustment are needed to support equilibrium behavior. The module also introduces mixed strategies, showing why randomization can be optimal in games such as rock-paper-scissors and penalty kicks. By the end of the module, you will see both the power and the limits of Nash equilibrium as a tool for analyzing strategic interaction.

This module examines the relationship between rationality and equilibrium in game theory. You will explore how Nash equilibrium can arise through careful reasoning, trial-and-error learning, and even evolutionary processes. Along the way, you will study payoffs, expected utility, dominated strategies, common knowledge of rationality, and mixed-strategy predictions. The module shows why game theory remains useful even when players differ greatly in sophistication.

This module focuses on cooperation and the tension between individual rationality and social efficiency. You will learn why Nash equilibrium often leads to outcomes that are stable but socially undesirable, and how game theory explains this conflict in settings such as the Prisoner’s Dilemma, market competition, and global warming. The module also introduces major ways to sustain cooperation, including better institutional design, binding contracts, repeated interaction, and reputation. By the end, you will see how game theory helps explain both the failure and the enforcement of cooperation in social and economic life.