GAMES, INFORMATION AND CONTRACT THEORY AND INDUSTRIAL ORGANISATION AND COMPETITION POLICY

GAMES, INFORMATION AND CONTRACT THEORY

Program

EN IT

Updated A.Y. 2017-2018

Outline

Static games of complete information. The Nash equilibrium in pure strategies. Nash equilibrium in mixed strategies. Cournot's model. Bertrand's model. Dynamic games of complete information. Extensive form games and backward induction. Subgame perfect Nash equilibrium. Stackelberg  model of duopoly. Repeated games. The Prisoner’s dilemma. Static Games of incomplete Information. Bayesian Nash equilibrium. Introduction to Perfect Bayesian Equilibrium.

Exam and grading

The exam for the whole course (GAMES, INFORMATION AND CONTRACT THEORY AND INDUSTRIAL ORGANISATION AND COMPETITION POLICY) consists in three tests: a written exam on Game Theory, an oral presentation on Industrial Organisation, and a take-home exercise on Social Capital. You will have a mark for each test.

The final mark is given by: 0.4*(mark of written exam) + 0.3*(oral presentation) + 0.3*(take-home exercise).

To be passed, the final mark must be no lower than 18. Moreover, the mark of the written exam and one of the other tests (either the oral presentation or the take-home exercise) must be no lower that 18, and the mark of the remaining test (either the oral presentation or the take-home exam) must be no lower that 15. You will be admitted to the oral presentation only if you pass the written exam.

All the tests must be passed within one exam session, otherwise all the tests will be re-taken within one session.

During the course, a pre-exam will be also available. The pre-exam is a written exam on Game Theory. If you pass the pre-exam (mark no lower than 18), you are exempted from the written exam and you are directly admitted to the oral presentation. However, even if you pass the pre-exam you can decide to take the written exam, but in this case the mark of the pre-exam will expire.

Main reference

Gibbson, R. (1992), Game theory for applied economists, Princeton University Press.

Diary of lectures

Lecture 1. Introduction. Normal-form games. Best replies. Dominant strategies.

Lecture 2. Iterated elimination of strictly dominated strategies. Nash equilibrium.

Lecture 3, 4, 5, 6, 7, 8. Social capital and its law of motion.

Lecture 9, 10. Cournot model of duopoly. Mixed strategies. Exercises.

Lecture 11. Zero-sum games. Extensive-form games.

Lecture 12. Extensive-form games and associated normal-form games. Games with perfect information. Subgames. Subgame perfect equilibrium.

Lecture 13. Bertrand model of duopoly. Repeated games. Repeated Prisoner's dilemma.

Lecture 14. Collusion between Cournot duopolists.

Lecture 15. Incomplete information. Cournot competition under asymmetric information.

Lecture 16. Bayesian games. Bayesian Nash equilibrium.

Lecture 17. Dynamic Games of Incomplete Information

Lecture 18. Introduction to Perfect Bayesian Equilibrium. Stackelberg model of duopoly.