Game Theory | Jean-Christophe Spiliotis

Game Theory

Game theory is one of the success stories of modern economics. Originally concerned with gambling, it has since become part of the standard toolkit of social scientists, biologists, psychologists, political scientists -- even historians and philosophers! This course is an introduction to the methods and applications of game theory. It is designed to stimulate careful thinking about the use (and potential abuse) of mathematics as an instrument for the formal study of strategic behaviour. It also provides empirical evidence on these interactions.


I. Pure game theory

1. Fundamentals of game theory

Assignments

Week 2: Problem set 1, problems 1, 2 and 3; problem set 2, problem 1.
Week 3: Problem set 2, problems 2 and 3; problem set 3, problem 2.

Suggested readings

2. Refinements for dynamic and repeated games

Assignments

Week 4: Problem set 4, problems 1 to 3.
Week 5: Problem set 8, problems 1 to 3.

Suggested readings

II. Applied game theory: Who gets what–and why?

1. Auctions and mechanism design

Assignments

Week 6: Essay (see Additional assignments), which must be between 900 and 1100 words in length (excluding references). Your answer should demonstrate in-depth understanding of the question in relation to concepts from the course, but will also be assessed on the quality of written expression, the argumentative structure, and engagement with the literature.
Week 7: Problems A, B and C (see Additional assignments); problem set 7, problem 2.

Suggested readings

  • Krishna, V. 2002. Auction Theory, Academic Press. [Chapter 5 (mechanism design)].
  • Klemperer, P. 2004. Auctions: Theory and Practice, Princeton University Press. [Part A and the associated appendix.]
  • Athey, S., J. Levin and E. Seira. 2011. 'Comparing open and sealed bid auctions: Evidence from timber auctions', Quarterly Journal of Economics, 126(1): 207–257.
  • Myerson, R. 1981. 'Optimal Auction Design', Mathematics of Operations Research, 6(1): 58–73. [The proofs of Lemma 2 (which became Myerson’s Lemma) and its corollary (the Revenue Equivalence Theorem) are particularly instructive.]
  • Vickrey, W. 1961. 'Counterspeculation, Auctions, and Competitive Sealed Tenders', Journal of Finance, 16(1): 8–37. [The most interesting sections for this purpose are II and especially III, where Vickrey introduces the eponymous auction.]

2. Bargaining and signaling

Assignment

Week 8: Problem set 5, problems 1 to 3; proof (see Additional assignments): no length restrictions–although conciseness is an essential virtue in this exercise!

Suggested readings


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