Fall 2014
ECON 482: Selected Topics in Economics – Applied Game Theory
Lectures:
Instructor:
Office Hours:
Website:
Tu 13:30-14:20 in AQ 5028 and Th 12:30-14:20 in AQ 5038
Shih En Lu (shihenl@sfu.ca)
Th 14:30-15:20 in WMC 4661 (September 11 – November 27)
http://www.sfu.ca/~shihenl/482/
I. SYLLABUS
The following documents, posted online, are an integral part of this syllabus: “Policy for
Absences” and “Regrades and Penalties”. You should consult them for more details about the
parts of this document labeled with a star (*).
Course Description
This course is a continuation of ECON 302, and introduces students to additional concepts from
game theory such as Bayesian games and perfect Bayesian equilibrium. However, the focus is on
applications such as non-cooperative bargaining, reputation and strategic information
transmission.
Prerequisite: ECON 302
Grading/Requirements: The final exam and work during the semester are each worth 50%.
However, if you do better on the final than during the semester in both absolute and relative
terms (F’>S in the formula below), then the weight on the final is increased to 70% for you.
Specifically, your grade G is: G = 0.3*S + 0.5*F + 0.2*max{S,F’} - X.
- S is your semester score. It is the average of your scores on the review quiz and any other
quiz(zes) and presentation(s). Scores are adjusted to ensure equity if not all students
perform the same number of presentations. S may be adjusted upward (slightly) for frequent
insightful participation, and may be adjusted downward (potentially significantly) for
unacceptably poor attendance.
- F is your final exam score. The final exam is on December 10, from 3:30-6:30pm.
- F’ is your adjusted final exam score. It is equal to F unless the average F > the average S, in
which case it is reduced by the difference in averages.
- X is a penalty for asking for an exception to this grading formula1 (e.g. shift weight, take
personal circumstances into account) or for making an unsuccessful regrade request.*
Example: In addition to the review quiz, there is one other quiz, and some students present once.
For students that have not presented, each quiz counts for 50% of S (and thus 15% or 25% of the
semester). For students that have presented, each quiz and the presentation count for 33.3% of S
(and thus 10% or 16.7% of the semester). In order to ensure fairness, an adjustment will be made
to take into account differences in grading standards between presentations and quizzes.
The thresholds for letter grades are set taking into account department grading standards and the
quality of enrolled students. Your letter grade will depend only on G and these thresholds.
1
Except for requesting an exemption as explicitly allowed under the policy for absences*, or if an SFU health
professional advises to this effect.
Required Textbook: Tadelis, Game Theory: An Introduction, Princeton University Press.
Lectures
Read the book before lectures: this way, you can selectively take notes instead of writing
everything down. Questions during lecture are encouraged. If you miss a class, you are
welcome to see me after reading the textbook and a classmate’s notes. I am always happy to
answer your questions about the material, but it is not my job to repeat the lecture!
Review Quiz and Final Exam
These are standard tests: closed-book and with pre-announced dates. There is no midterm.
Problem Sets, Quizzes and Presentations
Problem sets will not be graded. However, they will be evaluated in one of the following ways
on each problem set due date:
- I may randomly select students to present their solutions. Presentations will be graded
based on the accuracy of the solution, the clarity of the explanation, the correct use of
technical terms, and the ability to answer questions (both from me and from students).
See details in Section III of this document.
- I may give a closed-book quiz, most of which is very similar to the problem set.
- I may give an open-book quiz that tests the concepts you used on the problem set.
You will not know in advance which type of evaluation will take place.
On each due date with presentations or a closed-book quiz, your solutions will be collected at the
beginning of class. They will be returned to you at the end of class or at the beginning of the
following class. If you are selected to present a solution, you will have access to your solutions,
but no other aids, for your presentation. Therefore, even though handing in solutions is
entirely optional, you have a strong incentive to do it: if you don’t and are chosen to
present, you will have to solve a problem in front of the class with no notes! Also, remember
to write your name: if you do not, you will not have your solutions for the presentation.
You are allowed and encouraged to help each other in preparing solutions, but each of you
must handwrite your own solutions. If I notice solutions that are suspiciously similar (I may
skim them during a quiz or after class), I will proceed according to university guidelines for
dealing with academic dishonesty. Don’t let anyone copy your work!
In order to encourage participation, solutions to problem sets will NOT be posted. We will
go through every problem in class, either via presentations, or when I return the quiz. It is your
responsibility to take notes and ask questions when we go over the problem sets.
Policy on Absences, Exemptions and Regrades*
Consult the appropriate document online for deadlines and rules. A few important points:
- Only exam solutions written in pen are eligible for a regrade.
- The only acceptable documentation for medical absences, whether personal or for a
family member, is a complete SFU Certificate of Illness, with Section 1 filled out. You
must see the doctor while sick, and on (or, in certain cases, before) the exam
date/assignment due date.
- Final: Email me during the first week of class if the date conflicts with your religion.
Otherwise, only medical absences are allowed, and only for students with a reasonable
chance of passing.* Drop this course if you plan to miss the final for any other reason.
Office Hours
Ask me any question you have about the course material (be specific), microeconomic theory, or
grad school in economics. Do NOT ask me how you should study: this varies across students,
and as a 4th year university student, you should know what works for you better than I do.
Communication
Carefully read all emails that I send: they may contain important announcements. You may email
me. Although I will usually respond promptly, I cannot guarantee it. For lengthier questions, or
just to talk economics, come to office hours! If you have a scheduling conflict, but would like to
see me, email me to schedule an appointment. Do not call me.
II. TENTATIVE COURSE OUTLINE
Everything, including the number of problem sets, is subject to change. The online version of
this section will be updated as the need arises.
9/2
Introduction to course
9/4, 9, 11, 16 Review of ECON 302
9/23
Review quiz
9/18, 25; 10/2 Bargaining (with complete information) [Chapter 11 except 11.4.2]
9/30
Problem set 1 due
10/2, 7, 9
10/14
Bayesian Nash equilibrium [Chapter 12 except 12.5]
Problem set 2 due
10/16, 21, 23 Perfect Bayesian equilibrium [Chapter 15 and 16, except 15.3 and 16.3]
10/28
Problem set 3 due
10/30 - 11/18 Reputation [Chapter 17]
11/13
Problem set 4 due
11/20
11/25, 27
Cheap Talk [Chapter 18, except 18.3]
Problem set 5 due
12/10
Final Exam (covers all course material), 3:30-6:30pm
III. GRADING OF PRESENTATIONS
After you present, I will email you a score. (If you do not wish to receive your score by email,
which is an unsecured means of communication, let me know.)
The following scale is used when possible:
Essentially perfect solution, explanation and answers to questions
20
On easy problems, insightful discussion of how solution would change if some
simplifying assumptions are dropped
Complete, accurate and clearly explained solution
17-19 Satisfactory answers to questions
Few errors in the usage of technical terms
(“You got almost everything right and understand the material very well.”)
Mostly complete, accurate and clearly explained solution
14-16 Satisfactory answers to simple questions
Some errors in the usage of technical terms
(“You got most things right and understand the material well.”)
Either:
- Mostly complete and accurate solution, but with a poor explanation, few
satisfactory answers to questions and/or many errors in the usage of technical
terms (“You got the solution, but might not know what you’re doing or why
10-13
what you did is right.”)
- Incomplete solution, but with significant and clearly explained progress,
satisfactory answers to simple questions, and not too many errors in the usage
of technical terms (“You didn’t get the solution, but gave it a good try and
partially understand the material.”)
Incomplete solution with significant progress, but with an unclear explanation, few
8
satisfactory answers to questions and/or many errors in the usage of technical terms
(“You didn’t get the solution and understand the material poorly, but made
demonstrable effort.”)
4
Little progress on the problem
0
No presentation (absence or refusal), or no meaningful content in the presentation
Not every presentation will necessarily fall into one of the categories above. For example,
someone may give a perfect solution, but not have any ability to answer questions. Such
presentations will be evaluated on a case-by-case basis, with an emphasis on the demonstrated
understanding of the material.
Some problems will inevitably be more difficult than others. This will be taken into account. For
example, for a score of 18 or 19, a perfect solution will be required on easy problems while small
mistakes will be tolerated on difficult ones; a well-presented incomplete solution, normally
worth 10-13, may score in the 14-16 range if the problem is particularly difficult.
The approximate conversion into letter grades is as follows:
A: 17-20; B: 13-17; C: 10-13; D: 8; F: 0 or 4.