603 Microeconomic Theory -- Part 2

Spring - 2005

By the end of the course you will know the central solutions concepts used in game theory and be able to analyze situations where there are strategic interactions.

Course Organization

• Prerequisites

  You need to be familiar with some basic mathematics and probabilities. More importantly, you need not be afraid of formal and abstract reasoning. In the applications we will encounter some derivatives and one or two integrals, but this should not intimidate you. They are just applications.


 
• Lectures

  The class meets on Mondays and Wednesdays 10am--12pm. Attendance at the lectures is not compulsory but is very important. You are strongly encouraged to actively participate in class discussions and to ask questions during lectures.


 
• Office Hours and Staff
   
  • Lecturer: Oscar Volij
  • Office Hours: Fridays 10:00-12 or by appointment.
    You are strongly encouraged to come to office hours. This is the best way for the student to clarify ideas and the best way for the professor to grasp the students' level of understanding. Past experience shows that students who come to office hours perform better than those who do not come.
  • Teaching Assitant: Jie (Jack) He
  
   
• Reading Material

  For the game theory part of the course you are encouraged to read any textbook in Game Theory that you may find. No book is required. If you want to buy one, I would recommend Martin J. Osborne and Ariel Rubinstein, A Course in Game Theory , MIT Press. It is a very serious and formal book, where no single word is redundant. Another recommended book is Drew Fudenberg and Jean Tirole, Game Theory, MIT Press. Ken Binmore's Fun and Games is a less formal but still serious book, with excellent explanations and addressed to a broad audience where economists are a small minority.

  For the economic applications of game theory, I will follow Andreu Mas-Colell, Michael Whinston and Jerry Green, Microeconomic Theory , Oxford University Press. There is more than what we need there.
• Homework

  Homework consists of questions and problems on the material covered in class. It will be handed out in class and should be handed in in class. You are permitted to collaborate on the homework sets. The work that you hand in, however, should be uniquely yours and not a copy of someone else's. Working together is acceptable but copying is not.

• Exams

  The exam for this part of the course will take place on April 27, 2005.

• Class Participation

  It is important that you show your interest in the course. The best way to do so is asking questions and participating in class discussions. Your feedback is also very valuable. Please do not hesitate to provide comments and constructive criticism on the course organization.

• The Final Grade

  Your final grade will be computed as follows:

  • Homework: 20%
  • Final:=80%

• Outline of Topics
   
  • Strategic Games
    • Pure strategy Nash equilibrium.
    • Applications.
    • Mixed strategy Nash equilibrium.
    • Bayesian Games.
  • Extensive games with perfect information
    • Nash equilibrium.
    • Subgame perfect equilibrium.
  • Asymmetric Information.
    • Adverse selection, signalling, screening.
    • Auctions.