Financial Mathematics and Game Theory

The theory of competition has held a central place in economic analysis since the time of Adam Smith. This book, written by one of the most distinguished of contemporary economic theorists, reports on a major research program to provide strategic foundations for the theory of competition. Making use of insights from game theory, search theory and bargaining theory, the author develops a model to explain what actually goes on in markets and how a competitive general equilibrium is achieved. Essential reading for graduate courses in game theory and general equilibrium.

This book presents a general theory of economics based on free will. The laws of economics are deduced from the premise that people have free will and can change physical things in an attempt to achieve their chosen values. In addition, a theory of rights is also deduced from that premise. The conclusions are similar to those of the Austrian economists, such as Frederick Hayek and Ludwig von Mises, and to the philosopher, John Locke.

The author designed this book to develop the reader's understanding of the economic way of thinking by first providing verbal, intuitive explanations of concepts, then illustrating them with graphs and/or calculus. Optional chapters apply economic analysis to unconventional topics, including crime and marriage. In this second edition there are more analytical tools, including increased technical terminology, more graphical analyses and expanded discussions of topics and a chapter on game theory and oligopoly.