Case Western Reserve University

Department of Economics
ECON 329 - Game Theory
Fall 2020

Professor: Roman Sheremeta

Office Location: PBL 276
Office Phone: (216) 368-4271
E-mail: rms246@case.edu
Twitter: twitter.com/rshereme
Home Page: sites.google.com/site/romansheremeta

Class Location: Online

Class Time: Tuesday 8:30AM-9:45AM, Thursday 8:30AM-9:45AM
Office Hours: By appointment
Prerequisites: Calculus
Course Pages: sites.google.com/site/romansheremeta
canvas.case.edu

Course Description

This course introduces students to the study of strategic behavior in games with applications to
economics, business and public policy. The course objective is to advance your ability to think
and act strategically in interactive situations. Simple game theory models are used to study
decision-making in situations where payoffs to individuals depend on the behavior of other
individuals. Classroom experiments are used to illustrate many strategic situations, including
prisoners’ dilemma games, coordination games, tournaments, and bargaining games.

Course Objectives

At the completion of the course, you will learn to (1) think and act strategically in games, (2) use
game theory models to predict behavior, (3) apply appropriate models to real world situations
and provide policy implications.

Course Format

The course will combine lectures and experiments. In lectures, you will learn how to analyze
games using different equilibrium concepts, such as dominant strategy equilibrium, Nash
equilibrium, mixed strategy equilibrium, subgame perfect equilibrium, and Bayesian
equilibrium. In experiments, you will actually play different games with your classmates. These
experiments will give you hands-on experience on how to use strategic reasoning. You will be
able to test your analytic ability to apply strategic reasoning.

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Course Materials

Course materials:
 Power-Point slides
 Handouts

Course book (optional):

 Watson, J. (2013). Strategy: An Introduction to Game Theory (3rd Edition). Publisher:
W. W. Norton & Company.

Recommended books:
 Camerer, C. (2003). Behavioral Game Theory: Experiments in Strategic Interaction.
Princeton University Press.
 Kahneman, D. (2011). Thinking, Fast and Slow. Macmillan.

Evaluation

Your grade will be determined by your performance on homework assignments, experiments,

one midterm exam, and one final exam. The breakdown of the grade calculation:

Homework Assignments 30%

Experiments 10%
Midterm Exam 30%
Final Exam 30% D: 60.0% - 69.9%
Total 100% F: < 60.0%

Problem sets will be given in the class. You will have one week to complete each problem set.
You are encouraged to work in groups, but each student must submit their own work and will be
graded according to their own answers.

Throughout the semester, you will have an opportunity to play experimental games against other
classmates. Participation in the experiments is mandatory, and thus failing to participate will
reduce your grade. No preparation is required prior to the games.

This course will include a midterm and a final exam. Both exams are closed book and closed
notes. Both exams will test knowledge based on class discussions and accompanying power-
point handouts. The midterm exam will cover the material from the first half of the course, while
the final exam will cover the material from the second half of the course (e.g., the final will not
be cumulative).

Academic Integrity

All students in this course are expected to adhere to university standards of academic integrity.
Cheating, plagiarism, misrepresentation, and other forms of academic dishonesty will not be
tolerated. This includes, but is not limited to: consulting with another person during an exam,
turning in written work that was prepared by someone other than you, making minor
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modifications to the work of someone else and turning it in as your own, or engaging in
misrepresentation in seeking a postponement or extension. Ignorance will not be permitted as an
excuse. If you are not sure whether something you plan to submit would be considered either
cheating or plagiarism, it is your responsibility to ask for clarification. When your name appears
on a group product for a class, you are responsible for the integrity of the work, even if you did
not personally write the offending material.

Information on citations and plagiarism can be found on the following web sites:
library.case.edu/ksl/researchtools/citation/index.html and
www.indiana.edu/~wts/pamphlets/plagiarism.shtml. The academic integrity policies and
procedures that govern all undergraduates at CWRU may be found at
students.case.edu/handbook/policy/integrity.html and
students.case.edu/handbook/judicial/aiboard.html.

Course Topic Outline

The list of topics is tentative. The speed at which material is covered and to some extent content
will be determined endogenously as the course progresses. Therefore, I reserve the right to make
any changes to the course outline at any time. Announcements will be made weekly in class for
upcoming topics to be covered.

Lecture Topic Readings Assignments

Lecture 1 Introduction to Game Theory Chapter 1
Lecture 2 Normal Form Games Chapters 3, 5 Experiment 1
Lecture 3 Dominated Strategies Chapters 6, 7
Lecture 4 Nash Equilibrium and Best Response Chapter 9 Homework 1
Lecture 5 Maximization Problem Lecture Notes Experiment 2
Lecture 6 Cournot Models of Duopoly and Oligopoly Chapter 10 Experiment 3
Lecture 7 Contests and Tournaments Lecture Notes Homework 2
Lecture 8 Mixed Strategy Equilibrium Chapters 4, 11 Experiment 4
Lecture 9 Mixed Strategy Equilibrium: Theorems 1 and 2 Chapters 4, 11 Homework 3
Lecture 10 Mixed Strategy Equilibrium: Theorems 3 and 4 Chapters 4, 11 Experiment 5
Lecture 11 All-Pay Auction Lecture Notes
Lecture 12 Review for Exam 1 Chapters 1, 3, 4, 5, 6, 7, 9, 10, 11
Exam 1
Lecture 14 Extensive Form Games Chapters 2, 14 Experiment 6
Lecture 15 Subgame Perfect Equilibrium Chapter 15 Homework 4
Lecture 16 Imperfect Information Chapter 15
Lecture 17 Stackelberg Models of Duopoly Chapters 15, 16 Homework 5
Lecture 18 Experiments 7 and 8 Experiments 7, 8
Lecture 19 Repeated Games: Propositions 1 and 2 Chapter 22
Lecture 20 Infinitely Repeated Games and Markov Perfect Equilibrium Chapter 22
Lecture 21 Games For Fun Chapter 17
Lecture 22 Dynamic Oligopoly and Collusion Chapter 23
Lecture 23 Dynamic Contest and Cooperation Lecture Notes
Lecture 24 Review for Exam 2 Chapters 2, 14, 15, 16, 17, 22, 23
Exam 2