Readings

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Readings are also avaiable by session. There are no specific readings associated with recitation sections.

Textbook

The main textbook will be:

Amazon logo Gibbons, Robert. Game Theory For Applied Economists. Princeton, NJ: Princeton University Press, 1992. ISBN: 0691003955.

This is the only required textbook and covers the majority of this course's topics. I recommend that you buy it.

The following two books will also be very useful, especially for the exercises. (You need to solve a lot of problems to learn Game Theory.)

Amazon logo Dutta, Prajit. Strategies and Games. Cambridge, MA: MIT Press, 1999. ISBN: 0262041693.

Amazon logo Watson, Joel. Strategy: An Introduction to Game Theory. New York, NY: W.W. Norton, 2002. ISBN: 0393976483.

I will also refer to:

Amazon logo Kreps, David. A Course in Microeconomic Theory. New York, NY: Harvester Wheatsheaf, 1990. ISBN: 0745007627.

All the lectures will be supplemented with detailed notes as well.

Those who want more advanced treatment should look at:

Amazon logo Fudenberg, Drew, and Jean Tirole. Game Theory. Cambridge, MA: MIT Press, 1991. ISBN: 0262061414.

or

Amazon logo Osborne, Martin, and Ariel Rubinstein. A Course in Game Theory. Cambridge, MA: MIT Press, 1994. ISBN: 0262650401.

These two books are very good but harder than the level at which the course is pitched. Those who need an easier – and longer – exposition of the topics can read:

Amazon logo Dixit, Avinash, and Susan Sekeath. Games of Strategy. New York, NY: W.W. Norton, 1999, 2004. ISBN: 0393924998.

There have been several textbooks published recently. I encourage you to look at these books for extra problems to solve.

Readings by Session

"G" refers to Gibbons' textbook.


Lec # Topics READINGS
1 Introduction to Game Theory
2 Payoffs in Games: Rational Choice Under Uncertainty

Expected Utility Theory; Risk Aversion
Kreps, Chapters 3.1-3.3.
3-5 A More Formal Introduction to Games

Extensive Forms and Normal Forms

Strategies, Dominant Strategies and Iterative Elimination of Strictly Dominated Strategies

Nash Equilibrium

Applications of Nash Equilibrium
Extensive Forms and Normal Forms

G, Chapters 1.1A and 2.1A.

Strategies, Dominant Strategies and Iterative Elimination of Strictly
Dominated Strategies

G, Chapter 1.1B.

Nash Equilibrium

G, Chapter 1.1C.

Applications of Nash Equilibrium

G, Chapter 1.2.
6-8 Backward Induction and Subgame Perfection

Analysis of Extensive-Form Games

Backward Induction

Subgame Perfection

Applications

Bargaining and Negotiations

Forward Induction

Applications
Analysis of Extensive-Form Games

G, Chapter 2.1A.

Subgame Perfection

G, Chapter 2.2A.

Applications

G, Chapters 2.2B, 2.2C, 2.2D, 2.1B, and 2.1C.

Bargaining and Negotiations

G, Chapter 2.1D.
9 Review
10 In Class Midterm Exam 1
11-12 Repeated Games and Cooperation G, Chapter 2.3.
13-14 Incomplete Information

Bayesian Nash Equilibrium

Auctions

Applications
Bayesian Nash Equilibrium

G, Chapters 3.1A and 3.1C.

Applications

G, Chapter 3.2.
15-16 Dynamic Games of Incomplete Information

Perfect Bayesian Equilibrium

Sequential Bargaining Under Asymmetric Information
Perfect Bayesian Equilibrium

G, Chapter 4.1.

Sequential Bargaining Under Asymmetric Information

G, Chapter 4.3B.
17 Review
18 In Class Midterm Exam 2
19-21 Problems of Asymmetric Information in Economics

Signaling and the Intuitive Criterion

Applications of Signaling

The Principal-Agent Problem

Applications; Lemons, Efficiency Wages, Credit-Rationing, Price-Discrimination
Signaling and the Intuitive Criterion

G, Chapters 4.2A and 4.4.

Applications of Signaling

G, Chapters 4.2B and 4.2C.

The Principal-Agent Problem

Kreps, Chapter 17.
22-23 Global Games
24-25 Evolutionary Foundations of Equilibrium

Evolutionarily Stable Strategies and Replicator Dynamics
26-27 Applications and Review

Final Exam