Syllabus

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Course Description

Game Theory is a misnomer for Multiperson Decision Theory, the analysis of situations in which payoffs to agents depend on the behavior of other agents. It involves the analysis of conflict, cooperation, and (tacit) communication. Game theory has applications in several fields, such as economics, politics, law, biology, and computer science. In this course, I will introduce the basic tools of game theoretic analysis. In the process, I will outline some of the many applications of game theory, primarily in economics and political science.

Game Theory has emerged as a branch of mathematics and is still quite mathematical. My emphasis will be on the conceptual analysis, keeping the level of mathematical technicalities to a minimum, especially at a level that should be quite acceptable to the average MIT student. Yet bear in mind that this still implies that you should be at ease with basic probability theory and calculus, and more importantly, you should be used to thinking in mathematical terms. Intermediate Microeconomics is also a prerequisite, which can be waived with my consent, depending on your background. In particular, in addition to 14.01-Principles of Microeconomics, a student must have taken either 14.03, or an intermediate course in probability theory. Otherwise, the student needs my explicit consent. In any case, if you are taking this course, you should be prepared to work hard.

Lectures

Each lecture will be accompanied by lecture notes, which will be posted in advance. I will also post the slides of each lecture after the lecture. I will also try to post the incomplete versions of the slides before the lecture, but do not count on that.

Recitations and Office Hours

Given the class size and the difficulty of the subject, you may not follow all of my lectures. You will probably need a lot of help. This year there will be four TAs. They will help you. Each of us will have a weekly office hour. I strongly encourage you to come to these office hours to ask any point that you need clarification. There will also be three recitations on each Friday; two of them listed above, and one of them will be determined later. In these recitations, TAs will go over the topics that are covered by that week's lecture and answer your questions. Most weeks there will be some important points that I would want you to understand well, the points about which you will be examined. These points will also be covered in recitation. Two of the recitations will be designated for the students who feel they need help and clarification. Those who want to discuss philosophical issues and other advanced topics are encouraged to go to the third one.

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. The readings section contains a listing of all course readings.

Grading

There will be two midterms and a comprehensive final exam. All exams will be open book. Also 6 problem sets to be handed in. In exams and the problem sets there will be very easy questions that will test whether you understand the basic points, as well as challenging, difficult questions. Each midterm is worth 25%, the final is worth 40%, and the problem sets will make up the remaining 10% of the final grade. The first midterm will be on lecture 10 and the second one on lecture 18. A portion of the last class before each exam will be devoted to problem solving and the review of the material. (These review sessions are on lecture 9, lecture 17, and lecture 27.) In addition, there will be in-class quizzes. In these quizzes you will be asked to play various games. In most of these games you will not know who the other players are. The points (normalized to 5%) you get in these games will be bonuses. They will be added to your final grade after the cut off values for the letter grades are determined. (In this way, you will not be given any incentive to care about the other players' payoffs in the game.)


ACTIVITIES PERCENTAGES
Two Midterm Exams (25% each) 50%
Final Exam 40%
Six Problem Sets 10%