Extended Outline
Monopoly
Monopoly Problem
elasticity of demand, markup, price-cost margin, Lerner Index.
Price Discrimination
first-/second-/third-degree price discrimination, nonlinear pricing, arbitrage, hidden information, commitment.
Imperfect Market Competition
function, domain, range, one-to-one, onto.
Introduction to Game Theory
Illustration: Slide
Static Games and Nash Equilibrium
Normal-form Game
normal-form, players, strategies, payoff, strategy space, strategy profile, payoff function.
Nash Equilibrium
best response, Nash equilibrium.
Why and How Is Nash Equilibrium Reached?
rationality, focal point, self-enforcing agreement, repeated play, path dependence.
Static Oligopoly Models I
Hotelling Model of Spatial Competition
Bertrand Model of Duopoly
Bertrand paradox.
Cournot Model of Duopoly
Static Oligopoly Models II
Further Analysis on Cournot Model
Bertrand Model with Product Differentiation
Bertrand or Cournot?
Mixed Strategies and the Existence Theorem
Illustration: Slide
Mixed Strategies
Existence of Equilibrium
Kakutani's fixed point theorem, best response function.
Dynamic Games and Extensive-Form Representation
Illustration: Slide
Extensive-Form Game
extensive-form, strategy, information set, perfect information game, imperfect information game.
Subgame Perfect Nash Equilibrium
Subgame Perfect Nash Equilibrium
subgame perfect, subgame perfect Nash equilibrium (SPNE).
Stackelberg Model of Duopoly
Applications of Dynamic Games
Strategic Investment
strategic substitutes, strategic complements, fat-cat, lean and hungry, top dog, puppy-dog.
Bargaining Model
Repeated Games
Finitely Repeated Games
stage game, finitely repeated game.
Infinitely repeated Games
average payoff, infinitely repeated game, history, trigger strategy.
Falk Theorem
feasible.
Static Games with Incomplete Information
Bayesian Games
nature, type.
Cournot Game with Unknown Cost
Bayesian Nash Equilibrium
strategy, belief, Bayes' rule, Bayesian Nash equilibrium.
Revelation Principle
direct mechanism.
Dynamic Games with Incomplete Information
Perfect Bayesian Equilibrium
belief, sequentially rational, Bayes' rule, on the equilibrium path, off the equilibrium path, perfect Bayesian equilibrium (PBE).
Applications of Incomplete Information Games
Market for Lemon
Signaling Games
Cheap Talk Games
Bargaining Problems
Cooperative Games
cooperative game, coalitional game.
Nash Bargaining Solution
bargaining problem, agreement, disagreement outcome, bargaining solution, Nash (bargaining) solution.
Axiomatic Approach
independence of irrelevant alternatives (IIA).
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