Lecture 2 is attached below. More Material is available in Colin Camerers book. Link for downloading this book is given on the course page.
This is outline from earlier course. Current lecture is similar.
Experimental Economics – Lecture 2: Normal Form Games
Friday 18th February 2007
Dr. Asad Zaman PIDE
The first lecture covered essential material from Chapter 3 of Branislav Slantchev’s Lecture Notes. This Lecture will cover the material from Chapter 4. Both of these are available for download directly from Slantchev’s website, or from our Yahoo group ExpEcon.
Review Main concepts from lecture 1: (Chapter 3 – Slantchev)
How to make decision trees for games (= extensive form)
Simplest case: sequential games with perfect information.
Backward Induction and rollback to solve games.
Next case: simultaneous moves represented by information sets
Next case: random events represented as moves by nature.
Strategies for games = choices at each decision node of the tree.
For Lecture 2, the main concepts are: (Chapter 4 – Slantchev)
Normal Form of Games
Best Response
Dominant Strategies
Nash Equilibria in pure strategie
Solving games by elimination of dominated strategies.
How above does not work very well for weakly dominated strategies.
Using strategies to convert extensive form to normal form.
Requiring subgame perfect strategies.
Some problems in translation from extensive form to normal form.
Practical gaming problems for homework.