Game theory and strategy PROF. SALVATORE PICCOLO COURSE AIMS This course is a survey of the main ideas and techniques of game-theoretic analysis related to bargaining, conflict, and negotiation. As such, the course emphasizes the identification and analysis of archetypal strategic situations frequently occurring in bargaining situations. The goals of the course to provide students with a foundation to: 1. Apply game-theoretic analysis, both formally and intuitively, to negotiation and bargaining situations. 2. Recognize and assess archetypal strategic situations in complicated negotiation settings. 3. Feel comfortable in the process of negotiation. COURSE CONTENTS – Simultaneous moves games. – Games in strategic form, dominant strategy equilibrium, iterated deletion of strictly dominated strategies. – Reaction functions and Nash equilibrium. – Finding Nash equilibria with both discrete and continuous action spaces. – Mixed strategies, domination by a mixed strategy and never-best-response. Rationalisability.Games in extensive form. – Backward induction and information sets. – Subgame perfect Nash equilibrium. – Repeated games. Folk theorems. Collusion. – Imperfect Information and incomplete information. Risk dominance. – Forward induction. Bayesian Nash Equilibrium. – Sequential rationality, consistency of beliefs and perfect Bayesian Nash Equilibrium. – Signalling: separating equilibria and pooling equilibria. – Spence Signalling Model. – Adverse Selection/Moral Hazard. READING LIST R. GIBBONS, Game Theory for Applied Economists, Princeton University Press, 1992. Additional teaching material will be regularly distributed in class. TEACHING METHOD The course is based on theoretical lectures (50 hours) and on applications (10 hours). ASSESMENT METHOD The combination of attendance, participation, and problem sets count for 25% of the course grade. – Mid-semester Exam (25%). – Final Exam (50%). NOTES Further information on office hours will be defined in class.