When we talk about game theory, we're not talking about the simple games that ch ildren play.

A game is a strategic interaction, and in the context of networks, we recognize that our strategic actions affect each other in a fundamental way. Game theory is used to analyze everything from arms races between nations, to en vironmental pollution that transcends borders, and even to the use of performanc e-enhancing drugs in professional sports. The study of game theory includes the study of payoffs, including complicated payoffs such as those in contract negoti ations. You will use game theory as a tool in the broader examination of network s. In this section, you will: *Analyze optimal behavior in strategic settings *Define the terms dominant strategies and Nash equilibria *Identify strategies for applying dominant strategies in practical examples and real-life settings *Identify methods of bidding correctly in second-price auctions, such as the auc tions eBay runs *Read the required sections from the companion book, Networks, Crowds, and Marke ts: 6.1 6.8, 8.1 8.2, 9.1 9.4.