Econ 233: Introduction to Game Theory

Fall Semester 2013-2014

Course Outline

Instructor: Lyyla Khalid

Email: lyyla@lums.edu.pk
Office Hours: TBA
Course Pre-requisites:
Old [Microeconomics 1 ( Econ 211) , Probability/Probability and Statistics]
New [ Principles of Microeconomics AND statistics and Data Analysis)

Course Description:
Game theory helps us understand situations in which individuals interact. The focus of
game theory is interdependence, situations in which an entire group of people is affected
by the choices made by every individual within that group. It provides a set of analytical
tools to understand and consequently predict behaviour in multi-person decision settings.
This course introduces students to the study of this area. No prior knowledge of the
subject is assumed. It exposes students to some basic concepts of game theory and
explains how these concepts can be used to model a wide variety of game theoretic
structures.
The course will be important for all students planning to take Industrial Organization and
Advanced Microeconomic courses, and for those planning to pursue graduate studies in
economics and business.
Text:
The main text will be: Dutta, Prajit K. (1999) Strategies and Games: Theory and
Practice. The MIT Press: Cambridge, Massachusetts.
For reference you can consult:
1) Watson, Joel. 2002. An Introduction to Game Theory
2) Osborne, Martin J. 2004. An Introduction to Game Theory. Oxford University Press.
3) Rasmusen, E. (1989) Games and Information: An Introduction to Game Theory. Basil
Blackwell: Oxford. This book is more applied, but is almost a graduate text.
4) Gibbons R. (1992) Game Theory for Applied Economists. Princeton University Press:
Princeton, New Jersey. A bit advanced but an excellent applied text.

Lectures:
Twenty eight sessions of 110 minutes each.
Grading:
Quizzes (5)
Assignments (4 assignments)
Mid Term:
Final Exam:

25 %
10 %
30 %
35 %

Weekly Schedule:

Session 1
Session 2
Session 3
Session 4
Session 5
Session 6

Session 7
Session 8
Session 9

Session 10
Session 11

Session 12
Session 13
Session 14
Session 15

Topic
Introduction to Game
Theory
First Look at Applications
and Theory
Strategic Form and
Dominant Strategies
Dominance Solvability
Nash Equilibrium
Quiz 1: Assignmment 1
Due
Cournot Duopoly and
Cartel Solution
Mixed Strategies
Some Applications: War of
attrition, auctions
Some Applications: War of
attrition, auctions,
hotellings model
Zero Sum Games
Quiz 2: Assignment 2 due
Extensive Form and
Backward Induction
Subgame Perfect Analysis
Subgame Perfection contd ,
(Review for midterm)
Mid-Term
Finitely and Infinitely
Repeated Games

Reading

Chapter1 and 2
Chapter 3
Chapter 4
Chapter 5

Chapter 6

Chapter 8
Osborne and Watson
(handouts)
Osborne and Watson
(handouts)
Chapter 10
Chapter 11

Chapter 13
Chapter 13

Chapter 14, 15 and Watson

22

Session 16
Session 17

Session 18
Session 19
Session 20
Session 21
Session 22
Session 23
Session 24
Session 25
Session 26
Session 27
Session 28

Finitely and Infinitely

Repeated Games
Quiz 3
Finitely and Infinitely
Repeated Games
Bayesian Games
Bayesian Games
Quiz 4: Assignment 3 due
Bargaining Games
Bargaining Games
Rationalizablity
Moral Hazard and
Incentives
Quiz 5: Assignment 4 due
Incomplete Information
Incomplete Information
Trade with incomplete
information
Job Market signaling and
reputation
Review and Discussion

Chapter 14, 15 and Watson

22
Chapter 14, 15 and Watson
22
Chapter 9 Osborne
Chapter 9 Osborne
Chapter 16 Osborne
Chapter 16 Osborne
Osborne Ch. 12
Chapter 19 (19.1, 19.2,
19.3)
Chapter 20 (20.1)
Chapter 20 (20.2)
Chapter 27 (Watson)
Chapter 29 (Watson)