Basic Concepts

In this chapter, the basic characteristics of games are presented and discussed in detail. A game is defined by the players, their strategies, and the payoffs. The players are the relevant decision-makers who decide about an action from their strategy space. Depending on the joint decisions, the payoffs ultimately result, which provide information about the players’ incentives. Also relevant is the game sequence and information structure, i.e., what the players know about the game and whether they decide simultaneously or sequentially. All concepts are illustrated and critically discussed using examples.