Game Theory
Fall 2019
Assoc. Prof. Chris Ball
Economics Department
Email:
Office phone: +1 203 582 8745
Office Location: 4th Floor Rocky Top Student Center
QU Course Number: EC 355
Days: T,TH
Time: 3:30 pm  4:45 pm
Location: Room TBD
Required textbook:
Strategy: An Introduction to Game Theory (Third Edition) by Joel Watson
PART I: GAME THEORY BASICS and the NORMAL FORM

Chapter 1: Introduction

No endofchapter problems to do


Chapter 2: The Extensive Form

Endofchapter problems: #1  8 (all problems)


Chapter 3: Strategies and the Normal Form

Endofchapter problems: #1  7


Chapter 4: Beliefs, Mixed Strategies and Expected Payoffs

Endofchapter problems: #15


Chapter 5: General Assumptions and Methodologies

No endofchapter problems to do


Chapter 6: Dominance and Best Response

Endofchapter problems: # 1, 4, 5


Chapter 7: Rationalizability and Iterated Dominance

Endofchapter problems: #1, 2, 3, 4


Chapter 9: Nash Equilibrium

Endofchapter problems: none


Chapter 11: MixedStrategy Nash Equilibrium

Endofchapter problems: #1, 3  7


Chapter 14: Details of the Extensive Form

No endofchapter problems to do


Chapter 15: Sequential Rationality and Subgame Perfection

Endofchapter problems: #1, 2, 3, 5, 6, 7 (part (c) is optional), 11 a & b, and 12


Chapter 13: Contract, Law, and Enforcement in Static Settings

Endofchapter problems: #1, 2, 3, 7, 8, 9, and 11

PART II: “DYNAMIC” INTERACTION, THE EXTENSIVE FORM, and INFORMATION

Chapter 24: Random Events and Incomplete Information

Endofchapter problems (you should also solve these games): 1, 2, 3 and 5.


Chapter 26: Bayesian Nash Equilibrium and Rationalizability

Endofchapter problems: 1, 3(a), 6, 7 and 9


Chapter 27: Lemons, Auctions, and Information Aggregation

Endofchapter problems: none.


Chapter 28: Perfect Bayesian Equilibrium

Endofchapter problems: 1, 2, 3, 6, and 10.


Chapter 29: JobMarket Signaling and Reputation

Endofchapter problems: 1, 2, 3, and 7


Chapter 25: Risk and Incentives in Contracting

Endofchapter problems: TBD

Answer Key TBD

2019 Notes for Watson 3rd Edition
These are literally my class notes. The material in this folder will change throughout the course. Sometimes I use my old notes, so if you notice a chapter missing, see my old notes.
2019 Class Notes are in this DB Folder
ANSWER KEYS for End of Chapter and other problems.
They keys may contain errors (hopefully not, but maybe) so be sure to work all the problems yourself, discuss them with classmates and ask me if you have questions or you want to work a problem in class: KEYS are in this DB folder
OLD 2009 Notes for Watson 2nd Edition
These are my old class notes. It was the same book but an older edition. Also, I covered some different material in each chapter. So, you can find additional material here if you are interested. At the end of my notes for each chapter, I have a key for the EndofChapter problems for that chapter.
OLD Notes and Keys are in this DB Folder
VIDEOS, EXAMPLES and ADDITIONAL MATERIAL

Mixed Strategies  YouTube Video that's presented similar to the way we do in class. Note: I let p = prob(P2 chooses s1) and q = prob(P1 chooses s1). They switch them in this video. Otherwise, very similar to how I present it.

Another version of Harsanyi's Centipede game  YouTube Video, useful for understanding strategies and backward induction, extensive form games.

Bridge Burning and Commitment  YouTube Video, useful for extensive forms, SPE, and also understanding the key nature of strategies and commitment

Joel Watson's lectures for undergrads. The great thing is that all his notation will be the same as what we use since we follow his textbook closely.

Excel 2x2 Nash Solver. This is an excel sheet I made to help you check your answers. It will find pure and mixed Nash equilibria and it will identify strictly dominated strategies. Be careful though, the mixed calculations can get funky for some payoffs. So, still check your answers with pen and paper. This is a helpful tool, not a substitute for actually solving the games yourself.
Overview
This course aims to do two things: teach basic game theory and teach you to model.
First, in this course you should learn the basics of game theory so that you can apply it in life, in other disciplines (for example, in political science, sociology, and some areas of business), and as a foundation should you continue to graduate school. We will cover the foundations of game theory, normal/strategic form games, Nash Equilibria, extensive form games, Subgame Perfect Equilibria, games with imperfect information, and Bayesian Perfect Equilibria. In terms of applications we'll apply these to model a wide range of strategicinteractive environments and classic areas like marketentry for firms, principalagent problems, voting paradoxes, bargaining and screening and signalling games.
Second, you will get an introduction to modelling. In the end, we will cover Game Theory as an applied economics course. We'll learn the basic game theory and then solve games and apply the concept to various strategic environments. That is, at a basic level, modelling. Only by doing this will you learn to be able to apply basic game theory in any case in your own life that you like. In one sense, it's like learning the theory of supply and demand and marketclearing equilibrium, then applying it to any market you like in real life. So, you'll learn when to analyze something as a normal form versus an extensive form game, when to apply Nash Equilibrium versus Subgame Perfect Equilibrium and so on.
You learn to do this first by learning the theory, then by practicing applying it with practice problems, then finally by applying it on your own. The first two steps are covered in standard coursestructure. That is, we'll have lectures, practice problems and tests. The final step is a paper. Everyone in the class will find a topic to model, develop their own model and write it up as a short paper. These are usually 25 pages long.