This textbook offers a systematic, self-contained account of the main contributions of modern game theory and its applications to economics. Starting with a detailed description of how to model strategic situations, the discussion proceeds by studying basic solution concepts, their main refinements, games played under incomplete information, and repeated games. For each of these theoretical developments, there is a companion set of applications that cover the most representative instances of game-theoretic analysis in economics, e.g. oligopolistic competition, public goods, coordination failures, bargaining, insurance markets, implementation theory, signaling and auctions. The theory and applications covered in the first part of the book fall under the so-called 'classical' approach to game theory, which is founded on the paradigm of players' unlimited rationality. The second part shifts towards topics that no longer abide by that paradigm. This leads to the study of topics such as the interplay between evolution and rationality.

"In this highly original book Michael Bacharach aims right at the foundations of game theory by challenging its narrow and individualistic rationality assumptions. While retaining all of the theory's analytical force, he shows how we can incorporate into it broader psychological mechanisms such as frames, social identities, and salience, producing a tool capable of biting deeper and wider into real-world social phenomena. For years to come this book will sharpen the thinking of economists. All social scientists who strive to make sense of social behavior, even those hitherto suspicious of game theory, will find it a treasure trove of inspiration."--Diego Gambetta, Professor of Sociology and Official Fellow, Nuffield College, University of Oxford

"Michael Bacharach is best known as the creator of the epistemological approach to game theory. He died while working on an equally creative project that aimed at understanding the psychology of human coordination processes. Gold and Sugden are to be congratulated on working up the notes he left behind into a book that captures the kind of intellectual adventure that Bacharach loved so much."--Ken Binmore, Emeritus Professor of Economics, University College London, author of "Game Theory and the Social Contract, Vol. I" and "Vol. II"

""Beyond Individual Choice" addresses an important topic in game theory, namely, the type of reasoning that leads to coordination and cooperation in common interest games. It offers sensible and creative solutions to problems of strategic reasoning and thereby makes an excellent contribution to the foundations of game theory. The editors have done a fine job with Michael Bacharach's work; their perspectivescomplement his and add both unity and depth to the volume. Economists, psychologists, and philosophers will welcome the book, which is accessible to students of game theory in each of those disciplines."--Paul Weirich, Professor of Philosophy, University of Missouri, author of "Realistic Decision Theory"