EP 781 Advanced Game Theory
Course Specification
Lecturer: Dr. Vasileios Zikos and Dr. Dusanee Kesavayuth
Course description
The aim of this course is to show how game theory can provide valuable insights in a broad variety of
problems in economics. The course seeks to familiarize students will four classes of games, static
games of complete information, dynamic games of complete information, static games of incomplete
information, and dynamic games of incomplete information. These four types of games are illustrated
through problems that arise in different areas of economics, for instance, industrial economics. By the
end of the course, students will be able to solve game-theoretic models related to a broad variety of
economic phenomena.
Methods of Teaching/Learning

Lectures

Readings using the lecturer’s guidance

Solving exercises both during lectures and self-study

Responding to questions in class

Preparing and taking part in the mid-semester test and final exam
Course materials/textbooks
1. Gibbons, R., A Primer in Game Theory, Prentice Hall, 1992.
2. Lecture notes (provided by the lecturer)
Supplementary reading:
Osborne, M.J., An Introduction to Game Theory, Oxford University Press, 2004.
Please also refer to each Chapter in the lecture notes for more information.
Assessment
Your final mark will be based on the following:
Mid-Semester Test
In-Class Participation
Final Exam
Total
40%
10%
50%
100%
1
Course outline
Week
Topics
Hours
Teaching Method and
Teaching Materials
Instructor
 Lecture
Games in strategic form, Nash
 Gibbons: Chapter 1
equilibrium, strictly and weekly
1
12 Jan
(p. 1-14, Sections
dominated actions
Best response functions and
Nash equilibrium
1.2.A, 1.2.B)
3
 Osborne: Chapter 2
(p. 35-42)
 Vasileios’ Lecture
Economic applications of the
Dr. Vasileios Zikos
Notes: 1.2-1.11, 1.12,
Nash equilibrium
1.13
 Lecture
2
19 Jan
 Gibbons: Chapter 1
Mixed strategies
(Section 1.3)
3
Dr. Vasileios Zikos
 Vasileios’ Lecture
Notes: 1.14
 Lecture
3
26 Jan
Dynamic games of complete
and perfect information
 Gibbons: Chapter 2
(p. 55-64)
3
Dr. Vasileios Zikos
 Vasileios’ Lecture
Notes: 2.2
 Lecture
 Gibbons: Chapter 2
(p. 71-79)
4
2 Feb
5
9 Feb
Two-stage games of complete
but imperfect information
Dynamic games of complete but
imperfect information (general
tools of analysis)
6
Problem solving (Applications
16 Feb
on the contents of weeks 1-6)
3
Dr. Vasileios Zikos
 Vasileios’ Lecture
Notes: 2.3
 Lecture
 Gibbons: Chapter 2
(p. 115-129)
3
Dr. Vasileios Zikos
 Vasileios’ Lecture
Notes: 2.4
 Lecture
 Vasileios’ Lecture
3
Dr. Vasileios Zikos
Notes: 1.15 and 2.5
7
23 Feb
8
1 Mar
Mid-semester test
Repeated games – part I:
Two-stage repeated prisoners’
dilemma; Infinitely repeated
prisoners’ dilemma; Collusion
between Cournot duopolists
 On the contents of
weeks 1-6
3
Dr. Vasileios Zikos
 Lecture
3
 Vasileios’ Lecture
Notes: 3.2-3.3
2
Dr. Vasileios Zikos
9
8 Mar
10
15 Mar
11
22 Mar
Repeated games – part II:
Limitations of trigger strategies;
“Carrot-and-stick” strategy;
Folk Theorem
 Lecture
3
 Vasileios’ Lecture
Notes: 3.4-3.6
Dr. Vasileios Zikos
 Lecture
Static games of incomplete
information – part I: Definition
of Bayesian-Nash equilibrium;
Example: Cournot competition
under asymmetric information;
Normal-form representation of
static Bayesian games
3
Static games of incomplete
information – part II:
Incomplete information about
preferences; Example: Bach or
Stravinsky
3
 Gibbons: Chapter 3
(p. 143-152)
Dr. Dusanee
Kesavayuth
 Vasileios’ Lecture
Notes: 4.2-4.4
 Lecture
 Vasileios’ Lecture
Notes: 4.5-4.6
Dr. Dusanee
Kesavayuth
 Lecture
12
29 Mar
Dynamic games of incomplete
information: Perfect Bayesian
equilibrium and related concepts
 Gibbons: Chapter 4
(p. 173-183)
 Vasileios’ Lecture
3
Dr. Dusanee
Kesavayuth
Notes: 4.7-4.12
13
5 Apr
Problem solving (Applications
on the contents of weeks 8-12)
 Lecture
 Vasileios’ Lecture
3
Dr. Dusanee
Kesavayuth
Notes: 3.7 and 4.13
14
12 Mar
Auctions – part I
3
 Lecture
Dr. Dusanee
Kesavayuth
Auctions – part II
3
 Lecture
Dr. Dusanee
Kesavayuth
Final Exam
3
15
19 Mar
 On the contents of
16
3 May
weeks 8-15
3
Dr. Dusanee
Kesavayuth