Markets, Games, & Strategic Behavior

Prentice Hall
Charles A. Holt
September 2006
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Students become fluent in economics when they can apply the concepts in a real, decision-making and strategic environment. For this reason, an increasing number of professors are incorporating experiments into their undergraduate courses.


In his new text, Charles Holt begins each chapter with a lead-off experiment designed as an organizing device to introduce economic concepts such as the Winner's Curse, Asset Market Bubbles, and Rent Seeking. These experiments are easy to facilitate in the classroom, and may be run “by hand” or online via an internet browser.


The early chapters in Part I of the text cover the basics, providing examples that feature markets with buyers and sellers, simple two-person games, and individual lottery choice decision. Professors can choose the order in which they cover later chapter topics, including markets, bargaining, public choice, auctions, individual decisions, games, and asymmetric information.


  • Each chapter includes an experiment which is easy to use in class. All games are available online, and most are also available to be run in class “by hand” using the end-of-chapter appendixes. Web based games can be set up and run from any standard browser (Internet Explorer and Mozilla) connected to the Internet.
  • The chapters are self-contained, making the format very flexible. Each chapter contains one game, carefully balancing theory and methodology. One-a-day readings in each chapter, ten to fifteen pages each, can be assigned in conjunction with each in-class experiment, or as supplemental reading.
  • The book's scope and flexible format make it easy to integrate in a variety of undergraduate courses.      
    • Intermediate Microeconomics courses will want to include the introductory chapters (2 and 3), markets (6, 7, 8, 10), bargaining (12), and public goods and externalities (14 and 16).
    • Game Theory course will want to include the introductory chapters (1 through 5), Cournot (6), bargaining (12), rent-seeking (17), behavioral game theory (23-26) and signaling (33).
    • Public Economics courses will want to include the introductory chapters (2 and 3), ultimatum bargaining (12), and public choice and voting coverage (14, 16-18).
  • Mathematics is kept accessible. Experiments are typically based on parametric cases that distinguish alternate theories. Calculus is only present in the chapters on auctions and Cournot markets, with optional sections preceded by discrete examples and graphs to provide a more intuitive approach.

Table of Contents

Part I. Basic Concepts: Decisions, Game Theory, and Market Equilibrium
Chapter 1. Introduction
Chapter 2. A Pit Market
Chapter 3. Some Simple Games: Competition, Coordination, and Guessing
Chapter 4. Risk and Decision Making
Chapter 5. Randomized Strategies
Part II. Market Experiments
Chapter 6. Monopoly and Cournot Markets
Chapter 7. Vertical Market Relationships
Chapter 8. Market Institutions and Power
Chapter 9. Collusion and Price Competition
Chapter 10. Market Failure Due to Unraveling: Lemons and Matching Markets
Chapter 11. Asset Markets and Price Bubbles
Part III. Bargaining and Behavioral Labor Economics
Chapter 12. Ultimatum Bargaining
Chapter 13. Trust, Reciprocity, and Principal-Agent Games
Part IV. Public Choice
Chapter 14. Voluntary Contributions
Chapter 15. The Volunteer's Dilemma
Chapter 16. Externalities, Congestion, and Common Pool Resources
Chapter 17. Rent Seeking
Chapter 18. Voting and Politics Experiments
Part V. Auctions
Chapter 19. Private Value Auctions
Chapter 20. The Takeover Game
Chapter 21. Common-Value Auctions and the Winner's Curse
Chapter 22. Multi-Unit and Combinatorial Auctions
Part VI. Behavioral Game Theory: Treasures and Intuitive Contradictions
Chapter 23. Multi-Stage Games
Chapter 24. Generalized Matching Pennies
Chapter 25. The Traveler's Dilemma
Chapter 26. Coordination Games
Part VII. Individual Decision Experiments
Chapter 27. Probability Matching
Chapter 28. Lottery Choice Anomalies
Chapter 29. ISO (in Search of …)
Part VIII. Information, Learning, and Signaling
Chapter 30. Bayes' Rule
Chapter 31. Information Cascades
Chapter 32. Statistical Discrimination
Chapter 33. Signaling Games
Chapter 34. Prediction Markets
Class Experiments

Companion Website