University of Washington
Department of Economics
Ben Keefer
Econ 485: Game Theory
Fall 2012
Course synopsis
Econ 485 is an upper division undergraduate course in microeconomic theory. The goal is to
give a rigorous introduction to the main concepts of game theory: strategy, solution concepts for
games, strategic behavior, commitment, cooperation, and incentives. The course emphasizes the
applications of the theory as much as the theory itself. Most of the applications will focus on
economics, for example: oligopoly theory, bargaining theory, and contract theory.
Prerequisite: either MATH 112, MATH 124, MATH 127, MATH 134, or MATH 145; 2.0 in
ECON 300. There will also be a waiting list on the first day of classes in case someone drops the
class during the first week.
Learning goals
At the end of the course, the students should be able to
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build games that represent common economic situations.
understand standard economic models based on simple game theory
apply standard solution concepts to static games, dynamic games, repeated games and
games of incomplete information.
Textbook:
Game Theory for Applied Economists, Robert Gibbons, 1992.
Office hours (in Savery 319G)
Note that I will not be able to answer questions about the material by e-mail.
Monday: 5:30---6:30 p.m., Wednesday: 2:15—3:15 p.m., or by appointment.
Course website:
https://catalyst.uw.edu/workspace/keeferbp/32885/
Course Requirements
Grades are based on a one-hour quiz, two exams, non-graded problem sets (see below), and a
written assignment. Each exam is cumulative. Please see the Department Flyer on the course
website for rules regarding absences during quizzes and exams as well as expectations regarding
academic honesty.
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An hour long quiz, worth 10%, will be on Monday, October 15, 2012
The first exam, worth 30% of the grade, will be on Wednesday, November 7, 2012.
The final exam, worth 40% of the grade, will be on Thursday, December 13, 2012.
Problem sets, worth 10%.
Written assignment, worth 10%, collected by end of class Wednesday, Nov. 28.
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Problem sets will only be graded as satisfactory (check) or not satisfactory. Note that the problem
sets will not be graded. The problem sets allow you to check whether you are making good
progress in understanding the material. To provide some incentive to do them regularly, I will
collect your answers and keep track of who turn them in to assign the 10% of the grade. To
receive credit, you must make a good faith attempt to solve ALL problems on the problem
sets. This record may also be used in cases of "close decisions" regarding grades.
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YOU MUST HAVE A SIMPLE CALCULATOR. For the quizzes, only simple calculators
will be permitted. A simple calculator performs only basic operations (+,-,*,/) and has no
permanent memory ability. No other electronic devices are allowed in class.
Readings (from Gibbons) (updated to match the pace of the lectures)
Lecture 1:
pp. 1-7 (strict dominance)
Lecture 2:
pp.8-12 (Nash equilibrium) + pp. 14-21 (Cournot)
Lectures 3:
pp. 21-22 (Bertrand) + Problem of the commons (p.27-29)
Lecture 4:
pp. 29-32 (mixed strategy)
Lectures 5-6:
Extensive form, pp.55-57 and 115-122
Lecture 7:
Quiz, Monday, October 15.
Lecture 8:
pp.57-64 (backward induction and Stackelberg)
Lecture 9-10: pp.71-79 (subgame perfection)
Lecture 11-12: pp. 82-107 (repeated games)
Lecture 13:
Static games of incomplete information, pp. 143-154.
Lecture 14:
Exam 1, Wednesday, November 7
Lecture 15:
More static games of incomplete information, pp. 143-154.
Lecture 16-18: More dynamic games of incomplete information, pp. 173—183.
Lecture 19:
pp.183-190 (signaling games)
Lecture 20-21: pp. 233-239 (refinement of PBE). Written assignment due Wednesday, Nov. 28.
Lecture 22:
Intro to Behavioral Economics (Not on Exam)
Final Exam: Thursday, December 13, 2012, 2:30—4:20 p.m. in Savery 264.
Written Assignment
Please explain how the insights you gleaned from this class can be applied to specific situations in your
life, either past, present, or future. You may also focus on situations faced by others in your life if you
wish. You are welcome to supplement your discussion using lecture material from class.
Your assignment should be five pages, double-spaced, Times New Roman, size 12 font. There will be no
penalties for going over.
You may either focus on a single insight and how it applies to instance(s) in your life. Or you may
choose to focus on a number of insights and situations each one can be applied. Your papers will be due
during our final exam slot: Wednesday, November 28. Please submit your paper as a Word document to
my email address: keeferbp@u.washington.edu. Your paper must be RECEIVED by 5:20 p.m.
The papers will be evaluated on the depth of analysis brought to bear. Any papers that (a) follow the
directions above and (b) include at least five different concepts from Game Theory class that are correctly
applied, (c) are at least five pages, and (d) address event(s) in the lives of you or those you know should
expect to receive a grade of 90 or above. Papers that meet all of the above requirements and that also
include 7 well-articulated concepts correctly explained and applied should expect to receive a grade of 95
or above.