After reading this chapter, students should be able to:

• Explain what an economist means by a game, and distinguish between one-stage and multiple-stage games.
• Describe methods for reasoning out the likely choices of opponents, and understand their limitations.
• Explain the concept of a Nash equilibrium, and apply it in simple games.
• Understand the benefits of playing unpredictably in certain games.
• Recognize whether threats are credible, and whether cooperation is achievable, in multiple-stage games.