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SS364 Game Theory SS364 AY19-2 Syllabus LSN Date Topic/Event Required Reading Learning Objectives Assigned Problems Notes Block 1: Simple Game of Strategy 1. Understand what game theory is and where it is used. Complete Cadet 1 10-Jan Introduction to Game Theory Chapter 1, pages 3-16 2. Identify where games occur Information Sheet 1. Know the components of a game and game theory terminology. 2 14-Jan The Structure of Games Chapter 2, pages 17-41 2. Understand how to classify games. Chapter 2: U1-U4 3. Understand the underlying assumptions in game theory. 1. Understand the extensive form of a game and its components. 3 18-Jan Sequential Move Games 1 Chapter 3, pages 47-63 2. Understand how to solve games using backward induction ("rollback"). Chapter 3: U2-U5 3. Explain the difference between first- and second-mover advantage. 1. Understand the complexities that arise by adding more moves to a game. 4 23-Jan Sequential Move Games 2 Chapter 3, pages 63-81 Chapter 3: U7-U10 2. Explain the intermediate valuation function. 1. Understand the normal form of a game and its components. 5 25-Jan Simultaneous Move Games 1 Chapter 4, pages 91-108 2. Explain the concept of a Nash Equilibrium. Chapter 4: U1, U4, U6 3. Understand the process of iterated elimination of dominated strategies. 1. Understand coordination games. 6 29-Jan Simultaneous Move Games 2 Chapter 4, pages 108-120 Chapter 4: U10-U12 2. Explain what happens when there is no pure strategy equilibrium. 1. Calculate best-response rules used to solve games in continuous space. 2. Explain the pricing game of oligopolies. Chapter 5: U1, U8, 7 31-Jan Simultaneous Move Games 3 Chapter 5, pages 133-165 3. Apply the concept of rationalizability. U10, U11 Explain criticisms of the Nash Equilibrium concept. 1. Solve games with both simultaneous and sequential games. 8 5-Feb Games with Sequential and Simultaneous Play 1 Chapter 6, pages 180-193 Chapter 6: U5, U6 2. Analyze the change in outcomes when the order of moves is changed in a game. 1. Illustrate simultaneous-move games using extensive form. 9 7-Feb Games with Sequential and Simultaneous Play 2 Chapter 6, pages 194-204 2. Illustrate sequential-move games using strategic/normal form. Chapter 6: U7, U11 3. Analyze three-player games. 10 11-Feb WPR1 Block 2: Games of Mixed Strategies and Uncertainty 1. Understand what constitutes a mixed strategy. 11 15-Feb Mixed Strategy 1 Chapter 7, pages 214-227 2. Find mixed-strategy equilibria in zero-sum games. Chapter 7: U1, U2, U6, U8 3. Calculate mixed-strategy equilibria in non-zero-sum games. 1. Understand the general properties of mixed-strategy equilibria Chapter 7, pages 227-249 2. Analyze evidence in mixed-strategy games. 12 20-Feb Mixed Strategy 2 Chapter 7: U9, U11, U12 Appendix pages 263-267 3. Apply best-response analysis to find Nash equilbiria in mixed strategies. 4. Calculate equilibria when one or both players have three strategies. Chapter 8, pages 271-279 1. Know the difference between complete and incomplete information. 13 22-Feb Uncertainty and Information 1: Imperfect Information Chapter 8: U1 Appendix pages 335-341 2. Understand how players deal with risk: sharing of risk and paying to reduce risk. 1. Understand adverse selection. 14 26-Feb Uncertainty and Information 2: Adverse Selection Chapter 8, pages 279-298 2. Describe cheap talk equilibrium. Chapter 8: S3, U2 3. Calculate lemon density of market failure. Uncertainty and Information 3: Adverse Selection in 1. Understand the impact of adverse selection o nthe labor market. 15 28-Feb Chapter 8, pages 298-310 Labor Markets 2. Know the difference between separating and pooling equilibria. 1. Solve a game in which just two plyers with differential information confront one another. 16 5-Mar Uncertainty and Information 4: Signaling 1 Chapter 8, pages 310-320 Chapter 8: S4, U3, U8 2. Distinguish between partially revealing and semi-separating equilibrium. Michael Spence, QJE, "Job Market 1. Identify signaling/screening applications in the military. 17 7-Mar Uncertainty and Information 5: Signaling 2 Chapter 8: U11 Signaling" 2. Execute beer/quiche signaling game. 1. Understand three solutions to escaping the prisoners' dilemma: repitition, penalties, leadership. 18 19-Mar Repeated Play Games Chapter 10, pages 377-405 2. Analyze real-world games with the prisoners' dilemma structure. 19 21-Mar Drop for Paper Proposal 20 25-Mar WPR2 Block 3: Application of Game Theory 1. Describe the different natures of collective-action games: prisoners' dilemma, chicken, and assurance. 2. Understand collective-action problems in large groups. 21 28-Mar Collective Action Games: Spillovers and Externalities Chapter 11, pages 417-458 3. Describe the differences between the individual (or private) incentives and the group (social) U1, U3, U4, U5 incentives. 4. Explain the classical and modern approaches to the problem of collective-action. 1. Know the components of strategic moves. 2. Understand a response rule. 22 1-Apr Strategic Moves: Credibility and Commitment Chapter 9, pages 342-370 3. Understand the roles credibility and commitment play in strategic games. U2 4. Disntinguish between threats and promises. 5. Understand how to establish credibility. 1. Define and explain price discrimination. 23 5-Apr Mechanism Design 1 Chapter 13, pages 515-529 2. Describe the principal-agent problem. U1, U3 3. Understand how contracts can be written to achieve information revelation. 24 9-Apr Mechanism Design 2 Chapter 13, pages 529-533 1. Understand how contracts can be written to induce desired effort levels. U7, U8 1. Describe nonlinear incentive schemes. 25 11-Apr Mechanism Design 3 Chapter 13, pages 533-543 S9 2. Describe a mechanism that aligns incentives on teams. 1. Describe the various auction rules and environments. 2. Understand the Winner's Curse. 26 15-Apr Bidding Strategy and Auction Design Chapter 16, pages 632-657 U1, U3, U4 3. Explain "Vickrey's Truth Serum." 4. Describe the considerations required as the auction seller. 1. Understand the various voting rules and procedures. 2. Explain the four voting paradoxes. 27 19-Apr Strategic Voting: Voting Paradoxes and Manipulation Chapter 15, pages 589-620 3. Explain "Black's Condition." U1, U3, U5, U7 4. Understand the ways in which strategic voting behavior can affect elections. 5. Explain the median voter theorem. 28 23-Apr Presentations Groups TBD 1. Identify the three principles of Nash's Coopoerative Solution. Project Paper due 29 25-Apr Presentations and Bargaining 1 Chapter 17, pages 663-679 U1 2. Calculate equilibrium in alternating offer and counteroffer. NLT 1600 07 May 1. Understand how multiple parties affects the bargaining equilibrium. 30 30-Apr Bargaining 2 Chapter 17, pages 680-691 U2 2. Identify how impatience affects the bargaining equilibrium. TEE TBD.
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