Published Aug 21, 2022
Many economic decisions are made in circumstances where there are no competitive markets. This course introduces students to individual and group choice in such settings. It covers how to model such settings as "games" in both the extensive and strategic form, and introduces the key equilibrium concepts associated with these models. An introduction to considerations in group decision making via cooperative game theory and welfare economics is provided in the last part of the course.
Prereq: ECON 290. Antireq: ECON 412 taken prior to fall 2016
| Identify the strategic situations and distinguish a game situation from a pure individual's decision problem. |
| Describe the simultaneous games using payoff matrix and define the solution concepts using the dominant strategy equilibrium and pure and mixed strategy Nash equilibrium. |
| Describe the sequential games using the game trees and use the backward induction to solve such games. |
| Analyze the oligopolistic market systems by using game theoretical tools |
| Apply well-founded strategies in bargaining situations using Nash and Rubinstein's bargaining solution concepts. |
| Define voting games and apply Impossibility Theorem and Condorcet Paradox |
| Dates | Topics |
| Sept 8 | Chapter 1: Fundamental Concepts in Game Theory Readings: Dixit Chapter 1 and 2, Osborne Chapter 1 |
| Sept 13 | |
| Sept 15 | Chapter 2 Simultaneous Games - Discrete Strategies Readings: Dixit Chapter 4, Osborne Chapter 2 |
| Sept 20 | |
| Sept 22 | |
| Sept 27 | Chapter 3 Simultaneous Games - Continuous Strategies Readings: Dixit Chapter 5, Osborne Chapter 3 |
| Sept 29 | |
| Oct 4 | |
Midterm 1 (Chapter 1 – 2 – 3) – Oct 6 | |
Reading Week | |
| Oct 18 | Chapter 4 Sequential Games Readings: Dixit Chapter 3, Osborne Chapter 5 and 6 |
| Oct 20 | |
| Oct 25 | |
| Oct 27 | |
| Nov 1 | Chapter 5 Combining Simultaneous and Sequential Games Readings: Dixit Chapter 6, Osborne Chapter 7 |
| Nov 3 | |
| Nov 8 | |
| Nov 10 | Chapter 6 Mixed Strategies Readings: Dixit Chapter 7, Osborne Chapter 4 |
| Nov 15 | |
| Nov 17 | |
Midterm 2 (Chapter 4 & 5 & 6) - Nov 22 | |
| Nov 24 | Chapter 7 Applications to Specific Strategic Situations Readings: Dixit Chapter 16 and 17, Osborne Chapter 8 and 16 |
| Nov 29 | |
| Dec 1 | |
| Dec 6 | |
Final exam (all chapters) - TBA | |
The instructor and University reserve the right to modify elements of the course during the term. The instructor might need to change course components due to the issues with using technology and uploading files to LEARN. The University may change the dates and deadlines for any courses in extreme circumstances. If either modification becomes necessary, reasonable notice and communication with the students will be given with an explanation and the opportunity to comment on changes. It is the student's responsibility to check their University of Waterloo e- mail and course website on LEARN daily during the term and to note any changes.
| Title / Name | Notes / Comments | Required |
|---|---|---|
| Dixit, A. K., Skeath, S., & McAdams, D. (2020). Games of Strategy: Fifth International Student Edition. WW Norton & Company. | No | |
| Osborne, M. J. (2004). An introduction to game theory (Vol. 3, No. 3). New York: Oxford university press. | No |
The topics are all covered by standard, introductory and intermediate game theory textbooks. You may want to read through the relevant sections of some such book because (a) it can provide a different perspective on the material presented, (b) it has more space devoted to discussions and examples, and (c) it serves as a source of exercises and practice problems. Here is a list of such textbooks other than the textbooks listed above:
• Fiona Carmichael, A Guide to Game Theory, Pearson Education, 2005
• J. Watson, Strategy: An Introduction to Game Theory, W. W. Norton & Company, 3rd edition, 2013
• E. Rasmussen, Games and Information: An Introduction to Game Theory, Wiley-Blackwell, 4th edition, 2006
• H.S. Bierman, L. Fernandez, Game Theory with Economic Application, Second Edition, Addison Wesley, 1998.
Readings Available on LEARN: Lecture slides, exercises, and solutions or answers will be posted on LEARN. It is your responsibility to download all materials uploaded on LEARN. When the classes are online, lecture videos will be uploaded on LEARN weekly.
| Component | Value |
|---|---|
| Midterm 1 | 25% |
| Midterm 2 | 25% |
| Final Exam | 50% |
There will be no make-up exams. No additional assignments or work will be assigned to improve the marks. The weight of a missed test for which a VIF is accepted will be shifted to the final exam. If you happen to be sick for both midterms, you should consider dropping the course.
The UW verification of illness form must be obtained on the exam day and submitted within three days of the missed exam date. Any medical notes submitted after three days of a missed deadline or a missed exam will not be accepted. Medical notes brought up at the end of the term to cover missed tests will not be accepted.
The instructor has no new exam arrangements if you miss the final exam. You will need to apply for consideration of a deferred exam through the office of the Department of Economics. If you have compelling and verifiable evidence that you cannot write the final exam at the scheduled time, you must follow this procedure to apply for a deferred exam. Please check the Deferred Final Exam Policy of the department.
No assignment screening will be used in this course.
All deferred Final Exam requests for economics courses are administered by the Economics Undergraduate Office. Please consult the Deferred Exam Policy at
https://uwaterloo.ca/economics/undergraduate/resources-and-policies/deferred-final-exam-policy.
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