EconS 424, Strategy and Game Theory

Syllabus – EconS 424, Spring 2026
Class slides classified by topics:
1. Introduction to games, ingredients, and representation.
  - Common knowledge of rationality in:
    - The Princess Bride, movie, 1987.
    - Friends, TV show, 1998.
2. Dominance solvable games: Application of Iterative Deletion of Strictly Dominated Strategies (IDSDS) and Iterative Deletion of Weakly Dominated Strategies (IDWDS).
3. Nash equilibrium in games with two players.
  - Application: Collusion and corporate leniency programs
  - The Prisoner’s Dilemma at the movies:
4. Nash equilibrium in games with N players.
  - Application: Strategizing in courses that curve grades.
5. Nash equilibrium with continuous action spaces.
  - Application: Imperfect competitive markets.
  - Application: Matching grants in public good games.
  - Application: Average bid auctions in Italian cities.
6. Mixed strategy equilibria (msNE) with two players.
  - Application: Sticking to your strategy.
7. Mixed strategy equilibria (msNE) with N players.
  - Mixed Strategies at the Movies: High Noon, Glengarry Glen Ross, and The Platform.
8. Strictly competitive games, and max-min strategies.
  - Max-Min Strategies at the Movies: Penalty Kicks, Das Root, and Rounders.
9. Sequential-move games, and subgame perfect equilibrium (SPNE).
  - Application: The game of Checkers is solved.
  - Application: “Split or Steal” game in Golden Balls.
10. Strategic pre-commitment.
  - Pre-Commitment at the Movies: Dr. Strangelove, The Good, the Bad, and the Ugly, and Ransom.
11. Bargaining games over finite and infinite periods.
12. Repeated games:
  - Introduction to finitely and infinitely-repeated games.
  - Extensions (imperfect monitoring, “stick and carrot” strategies, etc.).
  - Optional: Repeated Games at the Movies: Bridge of Spies, Groundhog Day, and Trainspotting.
  - Optional: Overlapping generations models.
13. Games of incomplete information – Bayesian Nash equilibrium (BNE):
  - Introduction to games of incomplete information and BNE.
  - Application: Beliefs on types in the market for automobiles.
  - Application: BNE at the Movies: The Hunt for Red October, Trading Places, and The Usual Suspects.
14. Applications of BNE to games with continuous actions:
  - Cournot competition under incomplete information.
  - Auction Theory. Paper and Slides.
15. More applications of BNE – Information aggregation among several players.
16. From Bayesian Nash Equilibrium (BNE) to Perfect Bayesian Equilibrium (PBE). Link and Handout.
17. A systematic procedure for finding all pure-strategy PBEs: Paper and slides.
18. Applications of PBE:
  - Labor market signaling game.
  - Monetary authority signaling game.
  - Application: Cold Openings in the Strategic Disclosure of Quality.
19. How to find Semi-separating PBEs (involving mixed strategies):
  - Introduction – Reputation in public good games.
  - Poker game.
  - Brinkmanship game.
20. Cheap Talk games (signaling with costless messages):
  - Cheap Talk with two types of privately informed player.
  - Cheap Talk with three types of privately informed player.
    - Application: Talk is not cheap in a court of law.
    - Application: The Usual Suspects
21. Signaling games in which both players (sender and receiver) are privately informed about their own type.
22. Equilibrium refinement criteria (the “Intuitive Criterion” and the “Divinity Criterion”).
  - Chapter 11, equilibrium refinement criteria.
  - You can find more details about the application of these two refinement criteria, including worked-out examples, here: Paper and Slides.
Game Theory web tutor, initially developed for Game Theory: An Introduction with Step-by-Step Examples. (Choose numerical exercises and adjust the difficulty level as needed.)
Weekly review sessions (practice exercises with answers):
1. Representation of games and strategies.
2. Dominated strategies and Nash equilibrium (with extra exercises).
3. Nash equilibrium in games with continuous action spaces.
4. Mixed-strategy Nash equilibrium.
5. Backward induction and subgame perfection.
6. Bargaining games and repeated games I
7. Repeated games II
8. Games with incomplete information I
9. Games with incomplete information II and Auction Theory
10. Signaling games I
11. Signaling games II
12. Signaling games III
  - You can find detailed answer keys to over 150 exercises in my book: Strategy and Game Theory, Practice Exercises with Answers, Springer-Verlag (2nd edition), Link and eBook format.
Homework assignments:
Exams: