ECO 3305
Sec 001
Spring 2016
K. Becker
Game Theory
OFFICE:
PHONE:
E-MAIL:
OFFICE HRS:
248 Holden Hall
834.7275
klaus.becker@ttu.edu
10:00 - 10:50 am MW and by appointment
TA:
Hongjie Qiang
234 Holden Hall, Office Hrs: 11:00am – 12:30 pm, WF
Text:
Joseph E. Harrington, Games, Strategies, and Decision Making, 2nd
Edition, 2015, Worth Publishers, New York
COURSE WEBSITE: http://myweb.ttu.edu/kbecker/ECO3305/3305Home.html
EXAMS:
4 exams will be given during the semester, 3 “Regular Exams” and a
Comprehensive Make-Up Exam (Monday, May 9th, 9:00 – 9:50am)
The date for each of the “Regular Exams” will be announced in class
at least 1 week prior to the exam. Students who have taken all 3 “regular”
exams during the semester do not have to take the “make-up” exam, but may
do so if they want to improve their grade.
An unspecified number of unannounced quizzes will be given during the
semester. These quizzes will count for 10% of your course grade
QUIZZES:
GRADING:
An unspecified number of unannounced quizzes will be given in class
during the semester. Missed quizzes cannot be made up.
Quizzes
Exam 1
Exam 2
Exam 3
20 points, 10%
60 points, 30%
60 points, 30%
60 points, 30%
In case a student misses one of the three “regular exams”, the “make-up”
exam will count for 30% of the course grade. In case two “regular exams”
were missed the “make-up” exam counts for 60% of the course grade. If
all three regular exams were missed the make-up exam will count for 90%
of the course grade. As mentioned above, missed quizzes cannot be made
up.
A total score of 180 points or more guarantees an “A” for the course. 160179 points guarantees a “B”, 140-159 a “C”, 120-139 a “D”, and 119 or
less points would be an “F”. Any “curving” of this grading scale (if
applicable) will be announced at the end of the semester.
Course Outline
ECO 3305 Introduction to Game Theory
Game Theory provides systematic way of analyzing problems of strategic behavior
where one agent’s actions depend essentially on what other agents may do. Game Theory has
been moving ahead very rapidly and the breadth and depth of its application to economics and
other social sciences is spectacular. One course in Game Theory cannot cover everything, and
this course does not do so. The objective of this course is to provide a nontechnical, but still
rigorous and precise introduction to game theory and its applications in economics, business,
political science, history, military science, sports, biology and so on.
I
II
Introduction to Strategic Reasoning
!
Strategic Situations - Why do people act this way? How should one act in such
situations?
!
What is a strategic situation and how common and important are they?
!
What is game theory?
!
How applicable is game theory? What can game theory really deliver?
Building a Model of a Strategic Situation
!
Extensive form games
- Perfect information
- Imperfect information
!
Concept of a strategy
!
Strategic form games
!
Moving between extensive form and strategic form games
!
Common knowledge - What does it mean and what are its implications?
!
Profile of a player
- Preferences - rationality and utility
- Beliefs
- Heterogeneity - How do we allow players to differ?
III.
IV.
V.
VI.
Solving a Game when Rationality is Common Knowledge
!
Strict dominance
!
Weak dominance
!
Iterative deletion of strictly dominated strategies
!
Applications
Solving for Nash Equilibria in Discrete Games
!
Defining a Nash equilibrium
!
Solving for a Nash equilibrium
!
Multiplicity of Nash equilibria
!
Selecting among equilibria
!
Applications
Solving for Nash Equilibria in Continuous Games
!
Continuous strategy sets
!
Defining the best response function
!
Applications
Mixed Strategy Nash Equilibria
!
Extending strategy sets to allow players to randomize
!
Defining a Nash equilibrium in mixed strategies
VII.
!
Games with mixed strategy equilibria
!
Applications
Sequential Games of Perfect Information
!
Nash equilibria in extensive form
!
Aunreasonable@ Nash equilibria and incredible threats
!
Subgame perfect equilibria
!
Applications
VIII. Sequential Games of Imperfect Information
IX.
X.
!
Solving for subgame perfect equilibria through backward induction
!
Applications
Bayesian Nash Equilibrium
!
Modeling private information
!
Bayesian equilibrium
!
Solving for a Bayesian equilibrium
!
Information and signals
!
Applications
Repeated Interaction
!
Strategic form of a repeated game
!
Finitely repeated games
!
Infinitely repeated games
!
Cooperation, renegotiation, and punishment
!
Applications
Learning Outcomes/Objectives and Course Assessment
Learning outcomes/objectives:
The essence of game theory is not a set of results - though
that surely lies at its foundations - but rather a process - the
way in which an argument is constructed, how a puzzle
about human behavior is solved. To learn game theory
means learning the logical argument that produces a
solution, a conclusion, a resolution of a mystery. Therefore
the primary objective of this course is to teach how to
analyze situations of strategic interaction between agents.
Of course in doing so the students will become familiar
with the terminology and basic definitions of game theory
as well as solution concepts employed in game theory to
predict what the outcome of a specific game will be.
Assessment:
The learning outcomes/objectives will be assessed by
presenting students with certain questions/puzzles during
the first week of the semester (first quiz or first homework).
Similar questions/puzzles will be asked again at the end of
the semester (last quiz or last homework). A comparison of
the answers to these two set of questions - or better, the
process by which the students come to an answer and the
arguments put forward by the students will allow an
assessment of how well the learning objectives have been
achieved.
Students with Disability:
Note: Any student who, because of a disability, may require special arrangements in order to meet the
course requirements should contact the instructor as soon as possible to make any necessary
arrangements. Students should present appropriate verification from Student Disability Services during
the instructor’s office hours. Please note instructors are not allowed to provide classroom
accommodations to a student until appropriate verification from Student Disability Services has been
provided. For additional information, you may contact the Student Disability Services office in 335
West Hall or 806-742-2405
Academic Integrity:
It is the aim of the faculty of Texas Tech University to foster a spirit of complete honesty and high
standard of integrity. Complete honesty is required of students in the preparation and presentations of any
and all phases of course work, as their own. This applies to quizzes of whatever length as well as to final
examinations, daily reports, term papers, or any other homework or completed assignment. The attempt of
students to present as their own any work not honestly performed is regarded by the faculty and
administration as a most serious offense and renders the offenders liable to serious consequences,
possibly suspension.
AScholastic dishonesty@ includes, but it not limited to, cheating, plagiarism, collusion, falsifying
academic records, misrepresenting facts, and any act designed to give unfair academic advantage to the
student (such as, but not limited to, submission of essentially the same written assignment for two courses
without the prior permission of the instructor) or the attempt to commit such an act.
Civility in the Classroom:
AStudents are expected to assist in maintaining a classroom environment that is conducive to learning. In
order to assure that all students have the opportunity to gain from time spent in class, unless otherwise
approved by the instructor; students are prohibited from engaging in any other form of distraction.
Inappropriate behavior in the classroom shall result, minimally, in a request to leave class.@
Examples of inappropriate behavior include cellular phones and beepers, hostile or excessively aggressive
behavior towards other students or the instructor, excessive tardiness, leaving class early, making
offensive remarks, prolonged chattering, reading newspapers during class, sleeping, talking out of turn,
arriving late to class, dominating discussions, overt inattentiveness, etc.
Absences due to Religious Observances and Texas Tech Athletics Conflicts
A student who intends to observe a religious holy day or participate in a sanctioned Texas Tech athletic
conflict must make the intention known to the instructor within two weeks of the start of class. A student
who is absent for one of these two reasons shall be allowed to reschedule an exam scheduled during the
absence or reschedule the due date of an assignment due during the absence until the day the student
returns from the religious observance or athletic event.