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 plausible payoffs, our game is a prisoners' dilemma. We learn that we should never choose a dominated strategy; but that rational play by rational players can lead to bad outcomes. We discuss some prisoners' dilemmas in the real world and some possible real-world remedies. With other plausible payoffs, our game is a coordination problem and has very different outcomes: so different payoffs matter. We often need to think, not only about our own payoffs, but also others' payoffs. We should put ourselves in others' shoes and try to predict what they will do. This is the essence of strategic thinking.

00:00:00 What Is Strategy?
00:02:16 Strategy: Where Does It Apply?
00:02:54 Administrative Issues
00:09:40 Elements of a Game: Strategies, Actions, Outcomes and Payoffs
00:21:38 Strictly Dominant versus Strictly Dominated Strategies
00:29:33 Contracts and Collusion
00:33:35 The Failure of Collusion and Inefficient Outcomes: Prisoner's Dilemma
00:41:40 Coordination Problems
01:07:53 Lesson Recap

Source: Ben Polak, Game Theory (Yale University: Open Yale Courses). Licensed under CC BY-NC-SA 3.0.