AØKA08076U Game Theory

Volume 2014/2015
Education
MSc in Economics
Content

This is a mathematically oriented course of game theory.

The course covers the standard parts of game theory, focusing mainly on non-cooperative games. The course starts with the expected utility theorem. For non-cooperative games, the teaching covers the most important solution concepts for strategic and extensive form games as well as some refinements of those solution concepts (rationalizability,  Nash equilibrium, correlated equilibrium, perfect equilibrium, sequential equilibrium). The Aumann model of knowledge is presented. Also, the theory of games under uncertainty is discussed, leading to the extension of the solution concepts previously encountered. Furthermore, we study specific classes of games (supermodular games and global games) that are often used in economic theory. Finally, we illustrate a more axiomatic approach by discussing the basics of social choice theory. If there is time and interest, the implementation problem will be introduced.

We will formally show under which assumptions the covered solution concepts exist and derive certain properties. We will then illustrate and apply the solution concepts in examples and exercises. A detailed lecture schedule will be published on  Absalon at the start of the term.

Learning Outcome

The course aims at giving the students the abilities and competences needed to understand and assess the fundamental aspects of strategic decision making by rational individuals where the framework for decision making specifies the actions open to the individuals as well as their objectives and the information available. The methodological goal of the course is to get students more accustomed to formal notation and proofs. In terms of content, students should be able to determine which of the covered concepts is relevant in a given strategic situation (e.g. a fully specified game). Student should then be able to apply the appropriate (solution)  concept in this situation. Students should be able to explain the concepts covered in the course using appropriate definitions and examples.

 main textbooks:

  • Martin J. Osborne and  Ariel Rubinstein: “A Course in Game Theory”, MIT Press, 1994 (note that an electronic version of the book is available for free from the websites of the authors);
  • M. Maschler, E. Solan and S. Zamir: “Game Theory”, Cambridge University Press, 2013

    the text books will be supplemented by some papers; the following is a tentative list of papers that might be covered

  • Aumann 1985: What is game theory trying to accomplish?; Frontiers of Economics
  • Carlson and van Damme “Global Games and Equilibrium Selection”, Econometrica, Vol. 61, No. 5 (Sep., 1993), pp. 989-1018
  • Morris and Shin “Global Games: Theory and Applications”, Econometric Society Monographs 35, 2003, 56-114 - Cambridge University Press
  • Milgrom and Roberts “Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities”, Econometrica, Vol. 58, No. 6. (Nov., 1990), pp. 1255-1277

 

Other useful sources:

  • Drew Fudenberg and Jean Tirole: “Game Theory”, MIT Press, 1991
  • Mas Colell, Whinston , Greene: “Microeconomic Theory”, Oxford University Press, 1995
No graduate course is required; however, mastering the material from Microeconomics C and the Maths courses in the Bachelor program is very helpful
3 hours of lectures per week for 14 weeks
  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 161
  • Theory exercises
  • 3
  • Total
  • 206
Credit
7,5 ECTS
Type of assessment
Oral examination
Oral exam
Exam registration requirements
One written take home assignment must be approved for students to be able to take the exam.
Aid
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censorship
Exam period
Will be updated before the start of the semester
Re-exam
Same as ordinary..
Criteria for exam assesment

The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.