Game theory is the study of strategic interactions, where economic agents ("players" in a "game") affect each other through their actions, and make their decisions in light of what others are likely to choose. One fundamental puzzle in game theory is how players can cooperate when each of them faces an incentive to cheat the others. Why would a producer exert effort to produce a quality product if the consumer cannot verify the quality until after purchase? Why would people contribute time and effort to community projects when they could relax and let others do the work? More questions arises from games of conflict, where one player wins only if others lose. How can we predict who will win? Yet more questions arise from games of coordination, where the players agree on which outcomes are good but don't necessarily know how to obtain them. When should we expect players to coordinate successfully? Game theory provides a unified framework for addressing these questions. By formalizing the situations that players face, we can trace the logical implications of our assumptions on players' preferences, beliefs, and methods of reasoning.
In this advanced course, students should be comfortable with rigorous definitions, logical reasoning, probabilities, and optimization using calculus.
Game theory is a core tool of modern economics, and also yields useful insights into business strategy, political science, computer science, sociology, biology, and other fields.
Evaluations will be based on exams, quizzes, and participation in lectures, discussion sections, and the course website.