EC 308.01:† Game Theory in Economics (Fall 2016)
Stokes Hall S295:† TTh (12:00 - 1:15)
Christopher Maxwell††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Maloney Hall, 337
firstname.lastname@example.org††††††††††††††††††††††††††††††††††††††††† ††††††††††† ††††††††††††††††††††††† Office Hrs:† TBA
http://www.cmaxxsports.com†††††††††††† ††††††††††† ††††††††††††††††††††††††††††††††††† x 2-8058† (no voicemail, svp)
Game Theory studies strategic interactions - how players behave, or might behave, in interactive situations in which selected strategies (actions/choices/decisions) impact each playerís own payoffs /consequences as well as the payoffs of other players (who are also selecting strategies).†
We will cover the basic analysis of simultaneous-move and sequential-move games, and then focus extensively on applications in Economics, in a variety of areas including imperfect competition, merger analysis, bargaining, signaling, mechanism design, voting and public choice, principal-agent problems, auction design, bidding strategy, and so forth.
This course has some features perhaps unusual for an Economics course:
The insights that emerge from these games and this Challenge are fair game for the exams.
Prerequisites: †Intermediate microeconomics (EC 201 or 203).† No exceptions.† I also assume that you are familiar with basic calculus, and in particular, elementary simple and partial differentiation (which will be used extensively in solving optimization problems and deriving equilibrium strategies).
Avinash Dixit and Susan Skeath (and for the 3rd and 4th eds., David Reiley), Games of Strategy, W.W. Norton & Company. (DS).†
I have deliberately not listed the edition; if you decide to purchase the text, feel free to buy the first or second edition.† While we will cover much of the material in the text, and I will point out from time to time where we are in the text, we will not be following the text closely.
A copy of DS will be placed on reserve at the OíNeill Library.
Some additional texts (There are a ton of books on the topic; this is just a sampling.† I list them just because sometimes it is useful to see a different presentation of the material. †Warning:† Most of these are more technical than DS.)
There are no make-up exams in this course.† If you miss either Mid-Term exam, then you must take the Final exam (exam weights will be adjusted proportionately).
Problem Sets:† The Problem Sets will be very helpful to you in learning the course material.† The problems are not equally difficult.† Some are fairly straightforward, solely designed to give you some practice with certain techniques; others are more difficult and intended to teach you some Economics.† I encourage you to work collaboratively on the Problem Sets, but please submit your own write-ups.† Grades on Problem Sets are curved.
The Prisonersí Dilemma Challenge:† This Challenge will commence after the first Mid-Term exam, and involve teams of students designing strategies for a repeated-play Prisoners Dilemma game.† Using computer simulation, each teamís strategy will be played a large number of times against the other teamsí strategies.† Each teamís grade in this assignment will be their final score (average payoff) relative to the highest team score in the class.† Additionally, a juicy prize will go to the team (or teams) that win(s) the most games (by outscoring the opponent).† (You will discover that the team that wins the most games will not fare as well when it comes to average payoffs.)
Canvas:† Course material will eventually be posted to the courseís Canvas site.
Accommodations:† If you are a student with a documented disability seeking reasonable accommodations in this course, please contact Kathy Duggan (x2-8093; email@example.com) at the Connors Family Learning Center regarding learning disabilities and ADHD, or Paulette Durrett, (x2-3470; firstname.lastname@example.org) in the Disability Services Office regarding all other types of disabilities, including temporary disabilities.† Advance notice and appropriate documentation are required for accommodations.
Academic Integrity:† You will be held to
Topics: †We will loosely follow the DS text, with lots of additional examples and illustrative games (chapter numbers here are for the 4th ed.).† Roughly speaking, the first half of the course focuses on theory, and the second, on applications.
1) Introduction and General Principles:
a) DS 1 & 2:† Basic ideas and examples.† How to think about strategic games.
2) Theory (may reverse order of chapters)
a) Simultaneous-Move Games
(1) DS 4:† Simultaneous-move games: Discrete strategies.
ii) Mixed strategies:
(1) DS 7:† Simultaneous-move games: Mixed strategies.
iii) More advanced:
(1) DS 5:† Simultaneous-move games: Continuous strategies.
b) Sequential Move Games
(1) DS 3:† Games with sequential moves.
ii) More advanced:
(1) DS 6:† Combining sequential and simultaneous moves.
iii) Games Against Nature
c) Risk Aversion (we may skip this topic)
i) DS Appendix to Chapter 8:† Risk attitudes and Bayesí Theorem.
3) Applications (topics and order subject to change)
a) DS 10:† The Prisonersí Dilemma and repeated play games.
b) DS 17:† Bargaining.
c) DS 8:† Asymmetric information, signaling and screening.
d) DS 12:† Evolutionary games.
We will, in all likelihood, end here.† Ö but if time permits: