The University of Texas at Dallas

SCHOOL OF MANAGEMENT
OPRE 6311 Ram Rao
Game Theory Spring 2005

COURSE DESCRIPTION

This course will introduce the student to essential ideas in Game Theory as part of the
broad knowledge that doctoral students in management must acquire. The required
textbook for the course is:

Games + Information by Eric Rasmussen 3rd edition, Blackwell, New York

In addition, I will give you a list of readings and notes through the semester. You should
come well prepared to class sessions as the pace of the course will be brisk.

Assignments and Grading

There are four required activities in the course. You will turn in 5 assignments. In
addition you will write up a response to at least one discussion Assignment. You will also
write two position papers, one form the first half and another from the second half based
on papers to be discussed in class. These position papers must address questions raised
by me, or questions that you think are appropriate. You should be prepared to present
your ideas orally in class. Both position papers will involve team-work with other
students. I have chosen these papers keeping in mind the areas of interest of students in
class. There will be two examinations, a mid-term and a final. The weights for the
activities are as follows:

Assignments: 20%

Position Papers: 10 + 15%

Midterm: 25%

Final: 30%

Office

INSTRUCTOR: Mr. Ram C. Rao

SM3.701; Voice: (972) 883-2580; FAX: (972)883-6727
E-mail rrao@utdallas.edu ; WebPages www.utdallas.edu/~rrao
Office Hours: W 1:00-3 pm or by appointment

SECRETARY: Ms. Bonnie Gordon

SM 3.621; (972) 883-2051
E-mail bonnieg@utdallas.edu
 The University of Texas at Dallas
SCHOOL OF MANAGEMENT
OPRE 6311 Ram Rao
Game Theory Spring 2005

COURSE SCHEDULE

Session Date Topic Assignment

#
1 Jan 11 Basic concepts and Equilibrium Chapters 1 and 2
Extensive Form
2 Jan 18 Discuss Papers I
3 Jan 25 Mixed strategies, Sub-game Perfection Chapters 3 and 4
Assignment 1
4 Feb 1 Discuss Papers II
5 Feb 8 Repeated Games, Folk Theorems, Chapter 5
Markov Perfection Assignment 2
6 Feb 15 Discuss Papers III
(10/11)
7 Feb 22(15) Incomplete Information, Moral hazard: Chapters 6 and 7
Hidden Actions Assignment 3
8 Mar 1 Mid-term examination
9 Mar 15 Papers IV
(24/25)
10 Mar 22 (29) Adverse Selection and Mechanism Chapters 9 and 10
Design
11 Mar 29 (30) Papers V
12 Apr 5 Signaling and Screening Chapter 11
Assignment 4
13 Apr 12 Auctions Chapter 13
14 Apr 19 Papers VI
15 Apr 26 Final Examination Assignment 5
 The University of Texas at Dallas
SCHOOL OF MANAGEMENT
OPRE 6311 Ram Rao
Game Theory Spring 2005

FURTHER READINGS

1. Game Theory by Fudenberg and Tirole, 1991, The MIT Press, Cambridge.
2. An Introduction to Game Theory by Martin J. Osborne, 2004, Oxford University
Press, Oxford
3. Essays on Foundations of Game Theory by Ken Binmore, 1990, Basil Blackwell
Ltd., Oxford
4. Handbook of Game Theory with Economic Applications by Aumann, Robert &

Sergiu Hart, 1992, North Holland New York.

5. The Theory of Learning in Games by Fudenberg and Levine, 1998, The MIT

Press, Cambridge.

6. Auction Theory by Vijay Krishna, 2002, Academic Press, San Diego.

7. Games and Decisions: Introduction and Critical Survey, by Luce and Raiffa,

1957, Wiley, New York

 The University of Texas at Dallas
SCHOOL OF MANAGEMENT
OPRE 6311 Ram Rao
Game Theory Spring 2005

Session 1
Read Chapters 1 and 2
Further Reading: 1, pp. 4-36
Session 2: All three papers can be accessed from JSTOR in UTD Library, electronic
resources.
1. Existence of Pure Strategy Nash Equilibrium
Read the paper by Stability in Competition, section I pp. 44-50 by Hotelling, The
Economic Journal, 39 (153), March 1929; also read 14.3, pp. 349-355 from the
book and comment on the following issues:
a. What is the difference between the pricing and location games?
b. Why is there no Nash equilibrium in pure strategies under some
conditions?
2. Multiple Nash Equilibria
Read the paper Bank Runs, Deposit Insurance and Liquidity, sections I to III by
Diamond and Dybvig, The Journal of Political Economy, 91(3), June 1983; and
comment on the following issues:
a. Why are there multiple Nash equilibria?
b. What is your understanding of the role of information in this model?
3. Multiple Stackleberg Equilibria
Read the paper Auctions and Bidding, sections I to V by McAfee and McMillan,
The Journal of Economic Literature, 25, June 1987; and comment on the
following issues:
a. What is the difference between the four types of auctions from an
informational perspective?
b. Why are equilibrium strategies different in the first price sealed bid and
second price sealed bid auctions?
c. What do you understand by revenue equivalence?