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Econ 233: Introduction to Game Theory


Fall Semester 2012-2013

Course Outline


Instructor: Lyyla Khalid
Email: lyyla@lums.edu.pk
Room No. 241
Office Hours: Mon/Wed: 9-10

Course Pre-requisites:

Old [Microeconomics 1 ( Econ 211) , Probability/Probability and Statistics]
New [ Principles of Microeconomics AND statistics and Data Analysis)


Course Description:

Game theory helps us understand situations in which individuals interact. The focus of
game theory is interdependence, situations in which an entire group of people is affected
by the choices made by every individual within that group. It provides a set of analytical
tools to understand and consequently predict behaviour in multi-person decision settings.
This course introduces students to the study of this area. No prior knowledge of the
subject is assumed. It exposes students to some basic concepts of game theory and
explains how these concepts can be used to model a wide variety of game theoretic
structures.

The course will be important for all students planning to take Industrial Organization and
Advanced Microeconomic courses, and for those planning to pursue graduate studies in
economics and business.

Text:

The main text will be: Dutta, Prajit K. (1999) Strategies and Games: Theory and
Practice. The MIT Press: Cambridge, Massachusetts.

1) Watson, J oel. 2002. An Introduction to Game Theory
For reference you can consult:

2) Osborne, Martin J . 2004. An Introduction to Game Theory. Oxford University Press.
3) Rasmusen, E. (1989) Games and Information: An Introduction to Game Theory. Basil
Blackwell: Oxford. This book is more applied, but is almost a graduate text.
4) Gibbons R. (1992) Game Theory for Applied Economists. Princeton University Press:
Princeton, New J ersey. A bit advanced but an excellent applied text.

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Lectures:

Twenty eight sessions of 110 minutes each.

Grading:

Quizzes (5) 25 %
Assignments (4 assignments) 10 %
Mid Term: 30 %
Final Exam: 35 %



Weekly Schedule:

Topic Reading
Session 1 Introduction to Game
Theory

Session 2 First Look at Applications
and Theory
Chapter1 and 2
Session 3 Strategic Form and
Dominant Strategies
Chapter 3
Session 4 Dominance Solvability Chapter 4
Session 5 Nash Equilibrium

Chapter 5
Session 6 Quiz 1: Assignmment 1
Due
Cournot Duopoly and
Cartel Solution

Chapter 6
Session 7 Mixed Strategies Chapter 8
Session 8 Some Applications: War of
attrition, auctions
Osborne and Watson
(handouts)
Session 9 Some Applications: War of
attrition, auctions,
hotellings model
Osborne and Watson
(handouts)
Session 10 Zero Sum Games Chapter 10
Session 11 Quiz 2: Assignment 2 due
Extensive Form and
Backward Induction

Chapter 11
Session 12 Subgame Perfect Analysis
Chapter 13
Session 13 Subgame Perfection contd ,
(Review for midterm)
Chapter 13
Session 14 Mid-Term
Session 15 Finitely and Infinitely
Repeated Games
Chapter 14, 15 and Watson
22
3
Session 16 Finitely and Infinitely
Repeated Games
Chapter 14, 15 and Watson
22
Session 17 Quiz 3
Finitely and Infinitely
Repeated Games
Chapter 14, 15 and Watson
22
Session 18 Bayesian Games Chapter 9 Osborne
Session 19 Bayesian Games Chapter 9 Osborne
Session 20 Quiz 4: Assignment 3 due
Bargaining Games
Chapter 16 Osborne
Session 21 Bargaining Games Chapter 16 Osborne
Session 22 Rationalizablity Osborne Ch. 12
Session 23 Moral Hazard and
Incentives
Chapter 19 (19.1, 19.2,
19.3)
Session 24 Quiz 5: Assignment 4 due
Incomplete Information
Chapter 20 (20.1)
Session 25 Incomplete Information Chapter 20 (20.2)
Session 26 Trade with incomplete
information
Chapter 27 (Watson)
Session 27 J ob Market signaling and
reputation
Chapter 29 (Watson)
Session 28 Review and Discussion