Time and Location
Class meetings: Thursdays, 09:30-12:30, DS-R525;
Exercise sessions: Mondays, 13:00-15:00, DS-R525;
Office hours: Thursdays, 13:30-14:30, R-5015
Description of the Course
The course is a primer in noncooperative game theory and its applications. It is divided in two parts. The first part considers games of complete information. It introduces concepts of Nash equilibrium and subgame perfect Nash equilibrium. The second part considers games of incomplete information. It introduces concepts of Bayesian equilibrium and perfect Bayesan equilibrium. The course is illustrated with game-theoretic models that lie in various fields of economics, such as industrial organization, regulation and political economy.
Required textbook is Robert Gibbons, Game Theory for Applied Economists, Princeton University Press, 1992 ("à mon réserve" in the library). Additional references and materials will be downloadable at this webpage.
Prerequisites: basic notions of optimization that will be revised in class upon necessity.
Grading will be upon two examinations; two home assignments and participation in class. They will count toward the grade as follows:
Final exam: 40%
Two home assignments: 20% (10% either)
Participation in class: 10%
Introduction: competitive equilibrium model and its limitations.
Reading: Competitive equilibrium model:
lecture notes;
Jean Tirole, The Theory of Industrial Organization, MIT Press, 1988:
p.6-11
Jeffrey Church and Roger Ware, Industrial Organization: A Strategic Approach,
McGraw-Hill Press, 1999: Table 12.2, p.447
Development of Game theory: http://cepa.newschool.edu/het/schools/game.htm
Part I: Games with complete information
1. Static games with complete information.
A. Equilibrium in dominant strategies: Prisoner's dilemma, Downsian model of
electoral competition;
Elimination of dominated strategies.
B. Pure strategy Nash equilibrium.
Prisoner's dilemma and Downsian model without dominated strategies; the problem
of commons;
Oligopolistic games: Bertrand paradox; Capacity constraints (Cournot model);
Mullainathan, S. and A. Shleifer (2005), "The Market for News", American
Economic Review, 95(4):1031-1053
C. Equilibrium in mixed strategies.
2. Dynamic games with complete information.
A. Games with complete and perfect information.
B. Games with complete but imperfect information.
Part II: games with incomplete information
1. Static games with incomplete information.
2. Signaling games.