EconS 424, Strategy and Game Theory

Syllabus – EconS 424, Spring 2022
Class slides classified by topics:
1. Introduction to games, ingredients, and representation.
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.
  - Handout on IDSDS and rationalizability with examples.
4. Nash equilibrium in games with N players.
  - Application: Matching grants in public good games.
  - Application: Strategizing in courses that curve grades.
5. Nash equilibrium with continuous action spaces.
  - 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.
8. Strictly competitive games, and max-min strategies.
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.
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: 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.
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.
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”).
  - You can find more details about the application of these two refinement criteria, including worked-out examples, here: Paper and Slides.
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:
1. Homework #1, Answer key.
2. Homework #2, Answer key.
3. Homework #3, Answer key.
4. Homework #4, Answer key.
5. Homework #5, Answer key.
6. Homework #6, Answer key.
Exams:

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