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.