Game Theory (2011)
Last up-dated: April 24, 2011
1. Important Announcement
The course grade is indicated to your answer sheet as well. I gave A if your total score is 75 or above, B if 55-74, and C if below 55. Many thanks for taking my course!April 24
I finished grading the final exam and assignment; average/ maximum / minimum scores (out of 50) are 35.33 / 44/ 17. Your answer sheets will be returned to your mail-box tomorrow. April 24
Here is the file of homework assignment for those who didn't take the final exam. April 4
For those who cannot take the final exam, I will provide a complementary Homework Assignment on April 4 (Mon), whose deadline is April 18 (Mon). March 29
I finished grading the midterm exam; average / maximum / minimum scores (out of 50) are 34.97 / 48 / 12 . Your answer sheets will be returned to your mail-box tomorrow. March 29
Slides for lectures 9, 10, and 11 were just uploaded. March 18
We have the FINAL exam on April 3 (Sun) from 10:40-12:10. March 9
We have the Midterm exam on March 9 (Wed) from 9:05-10:30 at Room 5F. February 23
There will be a make-up class on March 16, 13:20-14:50. February 16
There will be NO class on March 2. We will discuss the schedule of make-up classes next week. February 10
We have the first lecture on February 9th, from 9:00 at room 5J. February 8
2. Course Description syllabus
This is an introductory course in game theory, which will provide you with mathematical tools for analyzing strategically interdependent situations, i.e., the situation in which your optimal decision depends on what other people will do. In particular, we will study central solution concepts in game theory such as Nash equilibrium, subgame perfect equilibrium, and the Bayesian equilibrium. To illustrate the analytical value of these tools, we will cover a variety of applications, e.g., international relations, business competition, auctions, marriage market, and so forth. There is no prerequisite for this course, although some background on microeconomics and familiarity of probabilistic thinking would be helpful.
3. Course Outline
Introduction and motivation Feb. 9
Website: "Game Theory" by Wikipedia link
Static games and Nash equilibrium Feb. 9
Handout: Chapter 6 of Nicholson and Snyder [1]
Why and how is Nash equilibrium reached? Feb. 16
Homework:Questions 6.1 and 6.2 of Nicholson and Snyder [1].
Applications of static games Feb. 16
Advanced reading: Chapter 1.2 of Gibbons
Mixed strategy equilibrium Feb. 23
Handout: Chapter 7 of Luis Cabral, Introduction to Industrial Organization, 2000.
Advanced reading: Chapter 1.3 of Gibbons
Dynamic games and backward induction Feb. 23
Handout: Chapter 4.8 of Osborne
Midterm exam Mar. 9 90 minutes, 50 points
Files: exam solution
Games in extensive-form Mar. 9
Handout: Chapter 15 of Watson
Applications of dynamic games Mar. 16
Handout: Pages 268-273 ("Imperfect Competition and Strategic Trade Policy") of Paul Krugman and Maurice Obstfeld, International Economics, 8th edition, 2009.
Bargaining and repeated games Mar. 16
Handout: Chapter 16.1 of Osborne
Infinitely repeated games Mar. 16
Handout: Chapter 23 of Watson
Advanced reading: Chapter 2.3 of Gibbons
Static games of incomplete information Mar.23
Handout: Chapter 27 of Watson
Advanced reading: Chapter 3.3 of Gibbons
Applications of incomplete information games Mar. 23
Handout: Chapter 3.2.C of Gibbons
Behavioral game theory Mar. 30
Handout: Camerer (2008) "Behavioral Game Theory," in The New Palgrave Dictionary of Economics, 2nd ed.
Handout: Chapter 13.5 and 13.6 of Bernheim and Whinston, Microeconomics, 2008.
Advanced reading: Camerer and Fehr (2006) "When Does 'Economic Man' Dominate Social Behavior?" Science, 311: 47-52.
Review session Mar. 30
Final exam Apr. 3 90 minutes, 50 points
Files: exam solution
Files: assignment
4. Textbooks
There is NO official textbook for the class. While lecture notes (slides) will be the main material for the class, the following textbooks are recommended for those who need supplementary readings.
Robert Gibbons, Game Theory for Applied Economists, 1992
Joel Watson, Strategy, 2nd edition, 2008.
A useful text at roughly the same level as Gibbons, but contains variety of example, is:
Martin Osborne, An Introduction to Game Theory, 2004
Those of you interested in pursuing the subject further may consult with following advanced and authoritative sources.
Drew Fudenberg and Jean Tirole, Game Theory, 1991
Roger Myerson, Game Theory, 1991
Martin Osborne and Ariel Rubinstein, A Course in Game Theory, 1994
The following books contain many examples of game theory in action, both in business and in everyday life.
Barry Nalebuff and Avinash Dixit, The Art of Strategy, 2008
The old version with different title (Thinking Strategically, 1991) is also recommended.
Preston McAfee, Competitive Solutions, 2002
John McMillan, Games, Strategies, and Managers, 1992
The following recent textbook provides a lively introduction to the game-theoretic perspectives on economic development, which may especially attract your interests.
Bruce Wydick, Games in Economic Development, 2007
A chapter on game theory in microeconomics textbooks would be helpful. The following introductory and intermediate level books written by the same authors are recommended.
Walter Nicholson and Christopher Snyder [1], Intermediate Microeconomics and Its Application, 11th edition, 2009
Walter Nicholson and Christopher Snyder [2], Microeconomic Theory: Basic Principles and Extensions, 10th edition, 2007
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