Game Theory

Game theory analyzes strategic decision making of multiple interdependent actors and has become influential in economics, political science, and sociology. It provides novel insights in criminology because it is a universal language for the unification of the social and behavioral sciences and allows deriving new hypotheses from fundamental assumptions about decision making. This chapter first reviews foundations and assumptions of game theory, basic concepts, and definitions. This includes applications of game theory to offender decision making in different strategic interaction settings: simultaneous and sequential games and signaling games. Next, the chapter illustrates the benefits (and problems) of game theoretical models for the analysis of crime and punishment by providing an in-depth discussion of the “inspection game.” The formal analytics are described, point predictions are derived, and hypotheses are tested by laboratory experiments. The chapter concludes with a discussion of theoretical and practical implications of results from the inspection game.