Last up-dated: April 18, 2012
Course number: ECO290E
Winter / Wed 9:00-10:30 & 15:00-16:30 / Room 5F
Office hours: Thu 10:00-12:00 / C911
1. Important Announcement
Your final exams were returned to your mail-box. The mean of total score (i.e., midterm + final) is 62.2, the median is 60.5, the standard deviation is 15.1. Grade distribution is as follows. A: 65 or above, B: 45-64, C: 30-44, D: 20-29. April 18
I finished grading the final exams. The mean score is 23.7, the median is 21, the standard deviation is 8.8. April 18
I finished grading the midterm exams. The mean score is 38.5, the median is 40.5, the standard deviation is 8.9. Great performance overall :) March 26
There will be a make-up class on March 28, 10:40-12:10 at 5F. March 6
Lectures on March 14 will be cancelled. March 6
We have a final exam on March 28, 9:00-10:30 (90 minutes). The lecture room will be announced. February 29
There will be a make-up class on March 7, 10:40-12:10 at 5F. February 29
Files of midterm exam and its solutions are just uploaded. February 29
There will be a make-up class on February 29, 10:40-12:10 at 5F. February 23
We have a midterm exam on February 29, 9:00-10:30 (90 minutes) at 5F. The format of the exam should be similar to the past exams which are available from the old lecture websites. February 20
Lectures on March 21 will be cancelled. It is also likely that I cannot make it on March 14, either. The make-up classes should be arranged accordingly. February 10
Class room has moved from 5J to 5F. February 8
We have a first lecture on February 8, from 9:00 at lecture room 5J. See you guys there :) February 7
Slides for lectures 1 and 2 were just uploaded. February 4
This website is under construction. The materials are subject to change. December 26
2. Course Description syllabus
This is an introductory course in game theory, which will provide you with mathematical tools for analyzing strategic situations - 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 Bayesian equilibrium. Game theory has been widely recognized as an important analytical tool in such fields as economics, political science, phycology and biology. To illustrate its analytical value, we will cover a variety of applications that include international relations, development, 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.8
Static games and Nash equilibrium Feb.8
Reading: Chapter 6 of Nicholson and Snyder, Intermediate Microeconomics and Its Application, 11th ed., 2009.
Reading: Myerson (1999) "Nash Equilibrium and the History of Economic Theory" Journal of Economic Literature link
Why and how is Nash equilibrium reached? Feb.15
Handout: Gibbons (1997) "An Introduction to Applicable Game Theory" Journal of Economic Perspectives link
*Reading: Binmore (1987) "Modeling Rational Players I" Economics and Philosophy, 3: 179-214.
*Reading: Brandenburger (1992) "Knowledge and Equilibrium in Games" Journal of Economic Perspectives link
Static games with Continuous Strategies Feb.15
Handout: Chapter 7 of Cabral, Introduction to Industrial Organization, 2000.
Mixed strategy equilibrium Feb.22
Handout: Chapter 4.8 of Osborne
*Reading: Rubinstein (1991) "Comments on the Interpretation of Game Theory" Econometrica link
Dynamic games and backward induction Feb.22
Handout: Chapter 15 of Watson
Reading: Chapter 4 of Kreps
*Reading: Schwalbe and Walker (2001) "Zermelo and the Early History of Game Theory" Games and Economic Behavior link
Midterm exam (90 minutes, 50 points) Feb.29
Files: exam; solution
Games in extensive-form Feb.29(make-up)
*Reading: Reny (1992) "Rationality in Extensive-Form Games" Journal of Economic Perspectives link
Applications of dynamic games Feb.29
Handout: Chapter 11 of Krugman and Obstfeld, International Economics, 8th edition, 2009.
Handout: Chapter 2.1.B-D of Gibbons
*Handout: Chapter 16.1 of Osborne
Repeated games Mar.7
Handout: Kandori(2008) "Repeated Game" in The New Palgrave Dictionary of Economics, 2nd ed.
Static games of incomplete information Mar.7(make-up)
Handout: Chapter 27 of Watson
*Reading: Morris (1995) "The Common Prior Assumption in Economic Theory" Economics and Philosophy, 11: 227-253.
Applications of incomplete information games Mar.7
Behavioral game theory Mar.28
Handout: Chapter 13.5 and 13.6 of Bernheim and Whinston, Microeconomics, 2008.
Handout: Camerer (2008) "Behavioral Game Theory" in The New Palgrave Dictionary of Economics, 2nd ed.
Reading: Chapter 5 of Kreps
*Reading: Fehr and Schmidt (2006) "The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories" Chapter 8 of Handbook on the Economics of Giving, Reciprocity and Altruism link
*Reading: Camerer, Loewenstein and Prelec (2005) "Neuroeconomics: How Neuroscience Can Inform Economics" Journal of Economic Literature link
Introduction to market design
Reading: McMillan, Reinventing the Bazaar: A Natural History of Markets, 2002.
*Reading: Roth (2002) "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics" Econometrica link
*Reading: Roth (2008) "What Have We Learned from Market Design?" Economic Journal link
Blog: Market Design by Al Roth link
Business: Market Design Inc. link
Final exam (90 minutes, 50 points) Mar. 28
Files: exam; solution
*: Advanced materials
4. Grading
Course grade will be determined by combining grades on a midterm exam (50%) and a final exam (50%). There is NO take-home assignment.
5. Textbooks
There is NO official textbook for the class. While lecture notes are the main material for the class, the books listed below might be useful if you need supplementary readings.
The following introductory textbooks contain full of intuitive explanations:
Avinash Dixit, Susan Skeath, and David Reiley, Games of Strategy, 3rd, 2009
Joseph Harrington, Jr., Games, Strategies, and Decision Making, 2008
If you want to understand game theory in more lucid way, the next two books are recommended. The first one is concise, while the second contains variety of examples.
Robert Gibbons, Game Theory for Applied Economists, 1992
Martin Osborne, An Introduction to Game Theory, 2004
Those of you interested in pursuing the subject further may consult the following advanced and authoritative sources (all of them are Ph.D. level).
Drew Fudenberg and Jean Tirole, Game Theory, 1991
Roger Myerson, Game Theory, 1991
Martin Osborne and Ariel Rubinstein, A Course in Game Theory, 1994
(You can download it for free from here)
The following books contain many examples of game theory in action, both in business and in everyday life.
Avinash Dixit and Barry Nalebuff, The Art of Strategically, 2008
The old version titled with Thinking Strategically (1991) is more concise and also recommended.
Preston McAfee, Competitive Solutions, 2002
John McMillan, Games, Strategies, and Managers, 1992
The next is an insightful book that nicely illustrates logic and limitation of game theory.
Kreps, Game Theory and Economic Modelling, 1990.
Finally, the following textbook provides a lively introduction to the game-theoretic perspective on economic development.
Bruce Wydick, Games in Economic Development, 2007
6. List of Reading Papers
Lec2: Myerson (1999) "Nash Equilibrium and the History of Economic Theory" Journal of Economic Literature link
Lec3: Gibbons (1997) "An Introduction to Applicable Game Theory" Journal of Economic Perspectives link
Lec3: Binmore (1987) "Modeling Rational Players I" Economics and Philosophy, 3: 179-214.
Lec3: Brandenburger (1992) "Knowledge and Equilibrium in Games" Journal of Economic Perspectives link
Lec5: Rubinstein (1991) "Comments on the Interpretation of Game Theory" Econometrica link
Lec6: Schwalbe and Walker (2001) "Zermelo and the Early History of Game Theory" Games and Economic Behavior link
Lec8: Reny (1992) "Rationality in Extensive-Form Games" Journal of Economic Perspectives link
Lec10: Kandori(2008) "Repeated Game" in The New Palgrave Dictionary of Economics, 2nd ed.
Lec11: Morris (1995) "The Common Prior Assumption in Economic Theory" Economics and Philosophy, 11: 227-253.
Lec12: Milgrom (2008) "What the Seller Won't Tell You: Persuasion and Disclosure in Markets" Journal of Economic Perspectives link
Lec12: McAfee and McMillan (1987) "Auctions and Bidding" Journal of Economic Literature link
Lec13: Camerer (2008) "Behavioral Game Theory" in The New Palgrave Dictionary of Economics, 2nd ed.
Lec13: Fehr and Schmidt (2006) "The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories" Chapter 8 of Handbook on the Economics of Giving, Reciprocity and Altruism link
Lec13: Camerer, Loewenstein and Prelec (2005) "Neuroeconomics: How Neuroscience Can Inform Economics" Journal of Economic Literature link
(Lec14): Roth (2002) "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics" Econometrica link
(Lec14): Roth (2008) "What Have We Learned from Market Design?" Economic Journal link
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