Game Theory 1

Semester and Year Offered:

Course Coordinator and Team: Jyotirmoy Bhattacharya

Email of course coordinator: jyotirmoy@aud.ac.in

Pre-requisites:

Knowledge of calculus and probability at the 10+2 level. Familiarity with microeconomics at the B.A. (Hons.) level would be helpful but not absolutely essential.

Aim: Game Theory I deals with the classical core of noncooperative game theory. It familiarises students with the problems dealt with in game theory, games in extensive and strategic form and the solution concepts of rationalizability, Nash equilibrium and the refinements of Nash equilibrium. Empirical evidence from laboratory and field experiments will be introduced where appropriate and simple experiments would be conducted in class to help students see how actual behaviour may depart from the prediction of these classical solution concepts.

Course Outcomes:

On successful completion of this course students would be able to:

1. Appreciate the goals of non-cooperative game theory as a research program.
2. Demonstrate and understanding of the key equilibrium concepts in non-cooperative game theory and compute these equilibria for given games.
3. Formulate appropriate situations from economics and other social sciences as non-cooperative games and identify appropriate methods of game theoretic analysis in each case.

Brief description of modules/ Main modules:

1. Review of expected utility theory.
2. Games in strategic form: rationalizability and the iterated elimination of dominated strategies.
3. Games in strategic form: Nash equilibrium.
4. Games in extensive form: subgame perfection.
5. Bargaining games.
6. Repeated games and folk theorems.
7. Games of incomplete information: Bayesian Nash equilibrium, perfect Bayesian equilibrium.

Assessment Details with weights:

Reading List:

• Osborne, Martin J. and Ariel Rubinstein (1994). A Course in Game Theory, MIT Press.
• Fudenberg, Drew and Jean Tirole (1991). Game Theory, MIT Press.
• Maschler, Michael, Solan, Eilon and Zamir, Shmuel (2013). Game Theory, Cambridge University Press.

ADDITIONAL REFERENCE:

• Watson, Joel (2013). Strategy: An Introduction to Game Theory, 3rd edition, W.W. Norton.
• Binmore, Ken (2007). Playing for Real: A Text on Game Theory, Oxford University Press.
• Camerer, Colin F. (2003). Behavioral Game Theory, Princeton University Press.