Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (15.02.2023)
This course introduces into classic non-cooperative game theory and its applications in economics. The course develops the game-theoretical toolkit and teaches how to use it in various contexts, especially in modeling of competition (price and quantity competition, labor market competition, promotions, innovations, tournaments, rent-seeking), contracting and bargaining (organizational economics) and policy-making (monetary and fiscal policies, capital taxation, public policies and corporate policies).
In this undergraduate course, we will cover only games with complete information. Therefore, we will focus on problems in which rational agents have identical knowledge about fundamentals of the economy and their interactions, but cope with uncertainty over the actions of their opponents (strategic uncertainty). In contrast, the graduate course JEM013 covers games with incomplete information in which rational agents address both fundamental and strategic uncertainty.
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (15.02.2023)
This course introduces into classic non-cooperative game theory and its applications in economics. The course develops the game-theoretical toolkit and teaches how to use it in various contexts, especially in modeling of competition (price and quantity competition, labor market competition, promotions, innovations, tournaments, rent-seeking), contracting and bargaining (organizational economics) and policy-making (monetary and fiscal policies, capital taxation, public policies and corporate policies).
In this undergraduate course, we will cover only games with complete information. Therefore, we will focus on problems in which rational agents have identical knowledge about fundamentals of the economy and their interactions, but cope with uncertainty over the actions of their opponents (strategic uncertainty). In contrast, the graduate course JEM013 covers games with incomplete information in which rational agents address both fundamental and strategic uncertainty.
Literatura
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (15.02.2023)
Tadelis, S. (2013) Game Theory: An Introduction. Princeton University Press.
For each class, I will assign reading that will cover applications relevant to the concept covered in the class.
Sylabus -
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (15.02.2023)
Classes
We will be meeting on Wednesdays, 11-14, in Room 206.
Content
1. The Single-Person Decision Problem
Actions, Outcomes, and Preferences
Evaluating Random Outcomes
Rational Decision Making with Uncertainty
Rationality Violations
Rule-Rationality as a Synthesis of Mainstream and Behavioral Economics
Aumann, R. J. (2019)
Tadelis (2013) Chapters 1-2
Applications: Let’s make a deal, Money pumping, Allais paradox, Ambiguity aversion
Blavatskyy et al. (2022)
2. Normal-Form Games with Pure Strategies
Dominance in Pure Strategies
Iterated Elimination of Strictly Dominated Pure Strategies
Best Responses
Nash Equilibrium in Pure Strategies
Level-k Players
Weak Dominance
Coordination games, Risk Dominance
Belleflamme and Peitz (2015) Chapter 3.3
Tadelis (2013) Chapters 3-5
Applications: The Samaritan’s dilemma, Discrete-bid auctions, Cournot and Bertrand duopoly, Bertrand duopoly with limited production capacities, Firm’s choices of price-setting vs. quantity-setting, AI algorithms and pricing, Budgetary commons, Benefit of smallness, Perfect and imperfect tax competition, Texas electricity market, Approval voting, Covid-19 shelter-in-place orders
Asker, Fershtman, and Pakes (2021)
Dave et al. (2020)
Hindriks and Myles (2013) Chapter 20.2
Hortaçsu et al. (2019)
3. Normal-Form Games with Mixed Strategies
Mixed Strategies
Strategies, Beliefs, and Expected Payoffs
Mixed-Strategy Nash Equilibrium
Nash’s Existence Theorem
Contest Theory: Tullock Lottery, All-Pay Auction
Continuous Lotto Games
Konrad (2009) Chapters 1-2
Tadelis (2013) Chapter 6
Applications: American and British litigation, Course evaluation schemes at Charles University, Warren Buffett's ‘Billionaire's Buyout Plan’, Public procurements, Campaign finance cap, Venture capital contracting, Labor unions vs. trade unions, Grading competition
Gregor (2021)
4. Extensive-Form Games
Normal-Form Representation of Extensive-Form Games
Mixed versus Behavioral Strategies
Sequential Rationality
Backward Induction
Subgame-Perfect Nash Equilibrium
The One-Stage Deviation Principle
Belleflamme and Peitz (2015) Chapter 16.3.2
Tadelis (2013) Chapters 7-9
Applications: Price leadership in British supermarkets, Bundling and entry deterrence, Agenda-setting power of committee chairman, Monetary policy-making, Coordinated and sequential budgeting
Kim, Lan and Dobson (2021)
Riboni and Ruge-Murcia (2010)
5. Multistage and Repeated Games
Multistage Games
Infinitely Repeated Games
The Folk Theorem
Tadelis (2013) Chapter 10
Applications: Prisoner-Revenge Game
6. Bargaining
Chicken game
Waiting games
Legislative bargaining
Bilateral bargaining
The Infinite-Horizon Bargaining
Tadelis (2013) Chapter 11
Applications: Monetary vs. fiscal policy-makers, Fiscal stabilizations
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (15.02.2023)
Classes
We will be meeting on Wednesdays, 11-14, in Room 206.
Content
1. The Single-Person Decision Problem
Actions, Outcomes, and Preferences
Evaluating Random Outcomes
Rational Decision Making with Uncertainty
Rationality Violations
Rule-Rationality as a Synthesis of Mainstream and Behavioral Economics
Aumann, R. J. (2019)
Tadelis (2013) Chapters 1-2
Applications: Let’s make a deal, Money pumping, Allais paradox, Ambiguity aversion
Blavatskyy et al. (2022)
2. Normal-Form Games with Pure Strategies
Dominance in Pure Strategies
Iterated Elimination of Strictly Dominated Pure Strategies
Best Responses
Nash Equilibrium in Pure Strategies
Level-k Players
Weak Dominance
Coordination games, Risk Dominance
Belleflamme and Peitz (2015) Chapter 3.3
Tadelis (2013) Chapters 3-5
Applications: The Samaritan’s dilemma, Discrete-bid auctions, Cournot and Bertrand duopoly, Bertrand duopoly with limited production capacities, Firm’s choices of price-setting vs. quantity-setting, AI algorithms and pricing, Budgetary commons, Benefit of smallness, Perfect and imperfect tax competition, Texas electricity market, Approval voting, Covid-19 shelter-in-place orders
Asker, Fershtman, and Pakes (2021)
Dave et al. (2020)
Hindriks and Myles (2013) Chapter 20.2
Hortaçsu et al. (2019)
3. Normal-Form Games with Mixed Strategies
Mixed Strategies
Strategies, Beliefs, and Expected Payoffs
Mixed-Strategy Nash Equilibrium
Nash’s Existence Theorem
Contest Theory: Tullock Lottery, All-Pay Auction
Continuous Lotto Games
Konrad (2009) Chapters 1-2
Tadelis (2013) Chapter 6
Applications: American and British litigation, Course evaluation schemes at Charles University, Warren Buffett's ‘Billionaire's Buyout Plan’, Public procurements, Campaign finance cap, Venture capital contracting, Labor unions vs. trade unions, Grading competition
Gregor (2021)
4. Extensive-Form Games
Normal-Form Representation of Extensive-Form Games
Mixed versus Behavioral Strategies
Sequential Rationality
Backward Induction
Subgame-Perfect Nash Equilibrium
The One-Stage Deviation Principle
Belleflamme and Peitz (2015) Chapter 16.3.2
Tadelis (2013) Chapters 7-9
Applications: Price leadership in British supermarkets, Bundling and entry deterrence, Agenda-setting power of committee chairman, Monetary policy-making, Coordinated and sequential budgeting
Kim, Lan and Dobson (2021)
Riboni and Ruge-Murcia (2010)
5. Multistage and Repeated Games
Multistage Games
Infinitely Repeated Games
The Folk Theorem
Tadelis (2013) Chapter 10
Applications: Prisoner-Revenge Game
6. Bargaining
Chicken game
Waiting games
Legislative bargaining
Bilateral bargaining
The Infinite-Horizon Bargaining
Tadelis (2013) Chapter 11
Applications: Monetary vs. fiscal policy-makers, Fiscal stabilizations
