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## Syllabus

EN IT

### Learning Objectives

TRAINING OBJECTIVES
Identify the structural elements of basic strategic interactions, and represent a strategic interaction as a game. Provide to the student the main concepts of equilibrium needed to
solve static and dynamic games, identifying equilibrium strategies and the solutions to the game.

KNOWLEDGE AND UNDERSTANDING
The course provides the fundamental tools to analyze the most common strategic interactions in economic theory.
Students are presented with a logical-mathematical analysis of the topics of the course and invited to adopt this method to formalize their ideas. The formal structure of strategic
interactions is covered from the very beginning of the coure, together with the main results in terms of equilibrium and structural hypotheses to obtain them. At the end of the course, students will have a clear comprehension of the basics of Game Theory for non-cooperative games.

ABILITY TO APPLY KNOWLEDGE AND UNDERSTANDING
Students will be nudged to identify the basic elements of the strategic interactions covered in the course and to represent them as a game. On the basis of the key concepts of
equilibrium in static and dynamic non-cooperative games, students will be able to identify equilibrium strategies and their outcomes.

### Prerequisites

Knowledge of the basic notions of microeconomics and analysis (derivatives, series) is a
plus.

### Program

RATIONAL APPROACH
Introduction to rational choice theory and expected utility theory.
Rational game theory.
Prisoner's dilemma.
Best responses, dominant strategies, dominated strategies.
Iterated elimination of strictly dominated strategies.
Nash Equilibrium.
Cournot's and Bertrand's models of duopoly.
Mixed strategies.
Repeated games.
Dynamic games.
Subgame-perfect Nash Equilibrium.
Ultimatum game, dictator game, trust game.
Entry game.
Non-credible threats.
Bargaining.
Imperfect information.
Stackelberg's model of duopoly.
Multiplayer games; public goods games and common resource games.
BEHAVIORAL APPROACH
Introduction to behavioral economics and experimental economics.
Violations of rational choice theory.
Behavioral game theory.
Bounded rationality, beliefs, social preferences, and learning.
Social preferences and utility functions.
Signaling and communication.
Reciprocity, fairness, and inequality aversion.
Ultimatum, dictator, and trust games revisited.
Centipede game.
Public goods and common resource games revisited.
Identify, personality and individual differences in game theory.
Bayesian games (with social preferences)
Auctions.
Recap lectures.
Experimental sessions.

### Books

Gibbons, Robert (1992). Game Theory for Applied Economists. Priceton University Press.
Osborne, Martin (2003). An Introduction to Game Theory. Oxford University Press.

### Bibliography

Berg J., Dickhaut J. and McCabe K. (1995) Trust, Reciprocity, and Social History*, Games
and Economic Behavior, 10,122-142.
Camerer, C., & Thaler, R. H. (1995). Anomalies: Ultimatums, dictators and manners.
Journal of Economic Perspectives, 9(2), 209-219.
Charness, G. and Dufwenberg M. (2006), "Promises and Partnership" Econometrica 74:
1579-1601.
Chen, Y. and S. X. Li (2009), “ Group identity and social preferences,” American Economic
Review, 99: 431-457.
Ciccarone, G. Di Bartolomeo, G. Papa S. (2020), "The rationale of in-group favoritism: An
experimental test of three explanations", Games and Economic Behavior 124: 554-568.
Cox (2004), How to identify trust and reciprocity, Games and Economic Behavior, 46:
260-281.
Di Bartolomeo G. e S. Papa (2016): “ Trust and reciprocity: Extensions and robustness of triadic design,” Experimental Economics, Springer: 19 (1): 100-115.
Di Bartolomeo, G. Duwfenberg, M. Papa, S. Passarelli F. (2019), "Promises, Expectations & Causation", Games and Economic Behavior, 114: 137-146.
Forsythe, Robert; Horowitz, Joel L.; Savin, N.E.; Sefton, Martin (1994). "Fairness in Simple Bargaining Experiments", Games and Economic Behavior, 6: 347– 369.
Güth, W.; Schmittberger, R. & B. Schwarze (1982). "An Experimental Analysis of Ultimatum Bargaining". Journal of Economic Behavior and Organization, 3: 367-388.
Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1986). Fairness and the assumptions of economics. Journal of Business, 59, S285-S300.
Vanberg, C. (2008), “ Why do people keep their promises? An experimental test of two explanations. Econometrica, 76: 1467-1480.

### Teaching methods

Conventional lecture mode (frontal lecture). Experimental laboratory sessions in which the notions learned during the course will be applied and deepened.

### Exam Rules

The exam consists in a written session aimed at ascertaining the degree of knowledge of the topics listed in the program and covered during the course.

The written exam is based on a series of questions on the theory and exercises.

The assessment is based on the following criteria: knowledge of the topics of the course, ability to apply the rational or behavioral theory to specific problems, ability to use the proper scientific terminology, and analytical skills.

The exam is considered passed if the score is equal to or higher than 18/30.

There will also be an experimental laboratory session, in which the student will participate to an economic experiment. After the laboratory session, the student is required to write a brief summary of the experiment and analyze it by using the tools acquired in the course.