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# Game Theory and Optimisation

## Blockbook GT&O, EBC4188 and GT, EBC4146

The course consists of 14 meetings of 2 hours, two meetings per week. The first meeting is set up as a
lecture, where new topics are introduced and\or illustrated. Topics typically involve tools from
optimization, operations research, and computer science. The theory is illustrated in models, often derived
from game theory and computer science. The second meeting is a tutorial meeting, where exercises are
discussed.
Each week you are supposed to
2) Prepare the exercises before the tutorial.
Week 1. The simplex algorithm.
Cormen et al. Chapter 29, sections 29.1, 29.2, 29.3, 29.4, 29.5.
Exercises.
Cormen et al, Chapter 29.
Exercises 29.1-4, 29.1-5, 29.1-6, 29.1-7.
Exercises 29.2-2, 29.2-7.
Exercises 29.3-2, 29.3-5, 29.3-6.
Exercises 29.5-3, 29.5-5, 29.5-9.
Week 2. Duality theory and the Bondareva-Shapley Theorem.
Peters. Chapter 22, sections 22.2, 22.3, 22.6.
Peters. Section 16.5 on balancedness of the core.
Exercises.
Peters, Chapter 22.
Exercises 22.4, 22.6, 22.7.
Peters, Chapter 16.
Exercises 16.16, 16.17.

## Week 3. Bimatrix games and extensive form games.

Peters. Chapter 13, sections 13.1, 13.2.
Myerson. Chapter 4, sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7.
Peters. Chapter 5, section 5.3.
Exercises.
Peters, Chapter 13.
Exercises 13.3, 13.6, 13.7.
Myerson, Chapter 4.
Exercises 4.5, 4.6, 4.7.
Peters, Chapter 5.
Exercise 5.9.
Week 4. Bayesian games and incomplete information games.
Myerson. Chapter 3, sections 3.9, 3.11. BNE and ex post equilibrium.
Myerson. Chapter 6, sections 6.3, 6.5. Inefficiency of bilateral trade.
Exercises.
Myerson, Chapter 3.
Exercises 3.5, 3.7, 3.8.
Myerson, Chapter 6.
Exercises 6.4, 6.7.
Week 5. The Lemke-Howson algorithm.
Reader week 5. Computing two-player mixed Nash equilibrium
Exercises.
Exercises 1-5. (Tableau method)

## Week 6. Non-linear programming.

Luenberger and Ye. Chapter 11.1, 11.2, 11.3, 11.4, 11.5, 11.8.
Exercises.
Reader week 6: Resource Allocation Games.
Exercise 1.

## Week 7. Integer and mixed-integer programming

Theory. Integer programming.
Exercises.
Applications. MIP Modelling.
Recap+old exam questions.

Literature
The course will be based on chapters from standard textbooks plus additional readers.
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## Hans Peters, Game Theory: a multileveled approach, Springer, 2nd edition.

Cormen, Leiserson, Rivest, and Stein, Introduction to Algorithms, 3rd edition, MIT Press
Roger Myerson, Game Theory: analysis of conflict, Harvard University Press
Blockbook

## Recommended literature for background reading are:

1) David Luenberger and Yinyu Ye, Linear and Nonlinear Programming
2) Papadimitriou and Steiglitz, Combinatorial Optimization: Algorithms and Complexity
3) Nemhauser and Wolsey, Integer and Combinatorial Optimization, John Wiley& Sons
Prerequisites
Only Master students can take this course. Exchange students need to have obtained a BSc degree in
Economics, International Business, Econometrics, or a related topic. Familiarity with the basic concepts of
optimization, linear programming, and game theory will be helpful. A solid basis in mathematics and
calculus is also recommendable.
Teaching methods
Lecture, PBL, written exam.