Lecture Description
We first discuss Zermelo's theorem: that games like tic-tac-toe or chess have a solution. That is, either there is a way for player 1 to force a win, or there is a way for player 1 to force a tie, or there is a way for player 2 to force a win. The proof is by induction. Then we formally define and informally discuss both perfect information and strategies in such games. This allows us to find Nash equilibria in sequential games. But we find that some Nash equilibria are inconsistent with backward induction. In particular, we discuss an example that involves a threat that is believed in an equilibrium but does not seem credible.
Course Index
- Introduction: Five First Lessons
- Putting Yourselves Into Other People's Shoes
- Iterative Deletion and the Median-Voter Theorem
- Best Responses in Soccer and Business Partnerships
- Nash Equilibrium: Bad Fashion and Bank Runs
- Nash Equilibrium: Dating and Cournot
- Nash Equilibrium: Shopping, Standing and Voting on a Line
- Nash Equilibrium: Location, Segregation and Randomization
- Mixed Strategies in Theory and Tennis
- Mixed Strategies in Baseball, Dating and Paying your Taxes
- Evolutionary Stability: Cooperation, Mutation, and Equilibrium
- Evolutionary Stability: Social Convention, Aggression, and Cycles
- Sequential Games: Moral Hazard, Incentives, and Hungry Lions
- Backward Induction: Commitment, Spies, and First-mover Advantages
- Backward Induction: Chess, Strategies, and Credible Threats
- Backward Induction: Reputation and Duels
- Backward Induction: Ultimatums and Bargaining
- Imperfect Information: Information Sets and Sub-game Perfection
- Subgame Perfect Equilibrium: Matchmaking and Strategic Investments
- Subgame Perfect Equilibrium: Wars of Attrition
- Repeated Games: Cooperation vs. the End Game
- Repeated Games: Cheating, Punishment, and Outsourcing
- Asymmetric Information: Silence, Signaling and Suffering Education
- Asymmetric Information: Auctions and the Winner's Curse
Course Description
This course is an introduction to game theory and strategic thinking. Ideas such as dominance, backward induction, Nash equilibrium, evolutionary stability, commitment, credibility, asymmetric information, adverse selection, and signaling are discussed and applied to games played in class and to examples drawn from economics, politics, the movies, and elsewhere.