AØKA08005U Microeconomics III
This course furthers the introduction of game theory, non-cooperative as well as cooperative, and its applications in economic models. The student who successfully completes the course will learn the basics of game theory and will be enabled to work further with advanced game theory. The student will also learn how economic problems involving strategic situations can be modeled using game theory, as well as how these models are solved. The course intention is that the student becomes able to work with modern economic theory, for instance within the areas of industrial organization, macroeconomics, international economics, labor economics, public economics, political economics and financial economics.
In the process of the course the student will learn about
Static games with complete information,
Static games with incomplete information,
Dynamic games with complete information,
Dynamic games with incomplete information,
Basic cooperative game theory.
The first part of the course is devoted to static games with complete information. This part of the course extends the initial treatment of the subject from Microeconomics B (Mikroøkonomi B). The concept of a normal form game and solution concepts such as dominance and Nash Equilibrium are reintroduced in a formally rigorous way. Students will also study a variety of economic applications of the theory. Finally, they will look more deeply into the theory of static games with complete information by studying mixed strategies and mixed-strategy Nash equilibria, and discussing equilibrium existence.
The second part of the course extends the treatment of dynamic games with complete information. The students will learn this theory in a more rigorous way and discuss various economic applications. The students will then study games with imperfect information and repeated games. They will be introduced to extensive form games, and will learn about the relevant refinement of the Nash equilibrium concept: subgame-perfect Nash equilibrium. Again, the theory will be illustrated by economic applications.
In the third part of the course the students will study simultaneous games of incomplete information. They will learn about the concept of Bayesian Nash equilibrium and apply their knowledge to different kinds of auctions, mechanism design problems, and other applications.
The fourth part of the course is devoted to dynamic games of incomplete information. The students will analyze the implications of introducing sequential moves into the games with incomplete information. They will gain knowledge of the Perfect Bayesian Equilibrium and its refinements, and will apply the theory to signaling games and other relevant economic problems. In particular, they will look into the job-market signaling model of Spence and other asymmetric information models.
Finally, the course will address cooperative games. The students will learn the basics of bargaining theory and cooperative game theory.
After completing the course, the student should be able to:
Formally state the definition of a game and explain the key differences between games of different types (static games of complete information, static games of incomplete information, dynamic games of complete information, and dynamic games of incomplete information).
Describe in detail the equilibrium (solution) concepts that are relevant for these games (Nash Equilibrium, Subgame Perfect Nash Equilibrium, Bayes-Nash Equilibrium, Perfect Bayesian Equilibrium).
Define a cooperative game and know the solution concepts of cooperative game theory as well as the basics of bargaining theory.
Acquire knowledge about a number of special games and particular issues associated with them, such as repeated games (including infinitely repeated games), auctions and signaling games.
Explicitly solve for the equilibria of these games.
Explain the relevant steps in the reasoning of the solution.
Interpret the outcomes of the analysis.
Furthermore, be able to apply equilibrium refinements and the solution concepts of cooperative game theory, such as the core.
Analyze strategic situations by modeling them as formal games.
In particular, have the ability to set up, prove, analyze and apply the theories and methods used in the course in an independent manner.
- Be able to evaluate and discuss the crucial assumptions underlying the theory.
1. Robert Gibbons. A Primer in Game Theory. Prentice Hall 1992.
2. Martin J. Osborne: An introduction to Game Theory, Oxford University Press, 20043.
3. Some short additional materials (can be downloaded from the course page)
3 hours lectures a week from week 6 to 21 (except holidays).
2 or 3 hours exercise classes 1 to 2 times a week from week 6/7 to 21 (except holidays).
The overall schema for the BA 3rd year can be seen at https://intranet.ku.dk/polit_ba/undervisning/Lektionsplan-F18/Sider/default.aspx
or the Master at https://intranet.ku.dk/ECONOMICS_MA/COURSES/COURSECATALOGUE-F18/Pages/default.aspx
2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).
2 or 3 hours exercise classes 1 to 2 times a week from week 36/37 to 50 (except week 42).
The overall schema for the BA 3rd year can be seen at https://intranet.ku.dk/polit_ba/undervisning/Lektionsplan-E17/skemaer/Sider/default.aspx
or the Master at https://intranet.ku.dk/economics_ma/courses/CourseCatalogue-E17/Courseschema/Pages/default.aspx
Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Se skema" (See schedule) at the right side of this page (E means Autumn, F means Spring). The lectures is shown in each link.
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E17; [Name of course]” or “2200-F18; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5” or “Forår/Spring – Week 5-30”
Press: “ View Timetable”
Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned schedule and can be changed until just before the teaching begins without the participants accept. If this happens it will be informed at the intranet or can be seen in the app myUCPH and at the above link
- That the study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered, because the room has only seats for the amount of registered student.
- The teacher of the exercise class cannot correct assignments from other students than the registered students in the exercise class except with group work across the classes.
- That all exercise classes will be taught in English.
Registration and information for students not enrolled please find more information at Study Economics.
- 7,5 ECTS
- Type of assessment
- Written examination, 2 hours under invigilationat the computers of Copenhagen University.
Spring 2018: The exam must be answered in English.
Autumn 2017: The exam assignment is given in English and can be answered in English or in Danish. Language must be chosen at the course or exam registration.
- Exam registration requirements
To sit the exam three written assignments should be approved.
- Without aids
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
The course can be selected for external assessment.
- Exam period
Spring semester 2018:
The exam takes place June 12, 2018 at the exam venues of the university.
Autumn semester 2017:
The exam takes place Saturday the 6th of January 2018 at the exam venues of the university.
The exact time and room will be informed in the Self-Service at KUnet
Spring semester 2018:
The reexam takes place August 22, 2018 at the exam venues of the university.
Autumn semester 2017:
The reexam takes place February 9, 2018 at the exam venues of the university.
If only a few students have registered for the written re-exam, the reexam might change to an oral exam including the date, time and venue for the exam, which will be informed by the Examination Office.
Criteria for exam assesment
Students are assessed on the extent to which they master the learning outcome for the course.
To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.
- Class Exercises