Game Theory
Text: “Microeconomic Theory” by M.W.G.
Outline:
1. Choice under uncertainty (chap 6.B, 6.F.)
Expected utility theory
Subjective utility theory
2. Description of a game (chap 7)
Games in normal (strategic) form: static (one-shot) games
Games in extensive form: dynamic (sequential) games
Strategy: pure and mixed strategies
Information set
3. Solution concepts: predictions (solutions) of a game (chap 8, 9) Non-equilibrium approach:
Dominance (8.B)
Rationalizability (8.C)
Relationship between iterated dominance and Rationalizability
Common Knowledge Equilibrium approach
Nash equilibrium, Bayesian Nash equilibrium (8.D, 8.E)
Refinements of Nash equilibria
1. Normal form: Trembling-Hand perfect equilibrium (8.F)
2. Extensive form: subgame perfect equilibrium (9.B), weakly perfect Bayesian equilibrium (9.C, 9.D), sequential equilibrium (9.C, 9.D)
Bargaining games (9.App. A)
4. Repeated games (cooperation and coordination) (chap 12 App. A))
Folks theorems
(Ref. OR chap 8, FT chap 5 Kreps. chap 14) 5. Signaling games (games of communications)
Costly signaling (13.C, 13. App. A)
Costless signaling (cheap-talk game) (Ref. Salanie chap 4)
Reference for game theory
FT: “Game Thory” (1991) by Fudenberg and Tirole Gibbons: “A Primer in Game Theory” (1992) by Gibbons Kreps: “A Course in Microeconomic Theory” (1990) by Kreps
MWG: “Microeconomic Theory” (1995) by Mas-Collell, Whinston, and Green Myerson: “Game Theory: Analysis of Conflict” (1992) by Myerson
OR: “A Course in Game Theory” (1994) by Osborne and Rubinstein Salanie: “The Economics of Contracts” (1999) by Salanie
