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Strategic Situations and Welfare Economics Fall 2022
ECON 392

Published Aug 21, 2022

Class Schedule

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Instructor & TA (Teaching Assistant) Information

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Course Description

ECON 392:

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

Learning Outcomes

By the end of this course students should be able to:
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

Tentative Course Schedule

DatesTopics
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.

Texts / Materials

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.

Student Assessment

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.

Assignment Screening

No assignment screening will be used in this course.

Administrative Policy

Economics Department Deferred Final Exam Policy

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.

Intellectual Property

Students should be aware that this course contains the intellectual property of their instructor, TA, and/or the University of Waterloo. 

Intellectual property includes items such as:

  • Lecture content, spoken and written (and any audio/video recording thereof);
  • Lecture handouts, presentations, and other materials prepared for the course (e.g., PowerPoint slides);
  • Questions or solution sets from various types of assessments (e.g., assignments, quizzes, tests, final exams); and
  • Work protected by copyright (e.g., any work authored by the instructor or TA or used by the instructor or TA with permission of the copyright owner).

Course materials and the intellectual property contained therein, are used to enhance a student’s educational experience. However, sharing this intellectual property without the intellectual property owner’s permission is a violation of intellectual property rights.  For this reason, it is necessary to ask the instructor, TA and/or the University of Waterloo for permission before uploading and sharing the intellectual property of others online (e.g., to an online repository).

Permission from an instructor, TA or the University is also necessary before sharing the intellectual property of others from completed courses with students taking the same/similar courses in subsequent terms/years.  In many cases, instructors might be happy to allow distribution of certain materials. However, doing so without expressed permission is considered a violation of intellectual property rights.

Please alert the instructor if you become aware of intellectual property belonging to others (past or present) circulating, either through the student body or online. The intellectual property rights owner deserves to know (and may have already given their consent).

Chosen/Preferred First Name

Do you want professors and interviewers to call you by a different first name? Take a minute now to verify or tell us your chosen/preferred first name by logging into WatIAM.

Why? Starting in winter 2020, your chosen/preferred first name listed in WatIAM will be used broadly across campus (e.g., LEARN, Quest, WaterlooWorks, WatCard, etc). Note: Your legal first name will always be used on certain official documents. For more details, visit Updating Personal Information.

Important notes

  • If you included a preferred name on your OUAC application, it will be used as your chosen/preferred name unless you make a change now.
  • If you don’t provide a chosen/preferred name, your legal first name will continue to be used.

Mental Health Support

All of us need a support system. The faculty and staff in Arts encourage students to seek out mental health support if they are needed.

On Campus

Due to COVID-19 and campus closures, services are available only online or by phone.

  • Counselling Services:  counselling.services@uwaterloo.ca / 519-888-4567 ext. 32655
  • MATES:  one-to-one peer support program offered by the Waterloo Undergraduate Student Association (WUSA) and Counselling Services

Off campus, 24/7

  • Good2Talk:  Free confidential help line for post-secondary students. Phone: 1-866-925-5454
  • Grand River Hospital: Emergency care for mental health crisis. Phone: 519-749-4300 ext. 6880
  • Here 24/7: Mental Health and Crisis Service Team. Phone: 1-844-437-3247
  • OK2BME: set of support services for lesbian, gay, bisexual, transgender or questioning teens in Waterloo.  Phone: 519-884-0000 extension 213

Full details can be found online on the Faculty of Arts website

Download UWaterloo and regional mental health resources (PDF)

Download the WatSafe app to your phone to quickly access mental health support information.

Academic freedom at the University of Waterloo

Policy 33, Ethical Behaviour states, as one of its general principles (Section 1), “The University supports academic freedom for all members of the University community. Academic freedom carries with it the duty to use that freedom in a manner consistent with the scholarly obligation to base teaching and research on an honest and ethical quest for knowledge. In the context of this policy, 'academic freedom' refers to academic activities, including teaching and scholarship, as is articulated in the principles set out in the Memorandum of Agreement between the FAUW and the University of Waterloo, 1998 (Article 6). The academic environment which fosters free debate may from time to time include the presentation or discussion of unpopular opinions or controversial material. Such material shall be dealt with as openly, respectfully and sensitively as possible.” This definition is repeated in Policies 70 and 71, and in the Memorandum of Agreement, Section 6

Cross-listed courses

Please note that a cross-listed course will count in all respective averages no matter under which subject code it has been taken. For example, a PHIL/PSCI cross-list will count in a Philosophy major average, even if the course was taken under the Political Science subject code.

Territorial Acknowledgement

We acknowledge that we are living and working on the traditional territory of the Attawandaron (also known as Neutral), Anishinaabe and Haudenosaunee peoples. The University of Waterloo is situated on the Haldimand Tract, the land promised to the Six Nations that includes ten kilometres on each side of the Grand River.

For more information about the purpose of territorial acknowledgements, please see the CAUT Guide to Acknowledging Traditional Territory.

University Policy

Academic integrity: In order to maintain a culture of academic integrity, members of the University of Waterloo community are expected to promote honesty, trust, fairness, respect and responsibility. [Check the Office of Academic Integrity for more information.]

Grievance: A student who believes that a decision affecting some aspect of their university life has been unfair or unreasonable may have grounds for initiating a grievance. Read Policy 70, Student Petitions and Grievances, Section 4. When in doubt, please be certain to contact the department’s administrative assistant who will provide further assistance.

Discipline: A student is expected to know what constitutes academic integrity to avoid committing an academic offence, and to take responsibility for their actions. [Check the Office of Academic Integrity for more information.] A student who is unsure whether an action constitutes an offence, or who needs help in learning how to avoid offences (e.g., plagiarism, cheating) or about “rules” for group work/collaboration should seek guidance from the course instructor, academic advisor, or the undergraduate associate dean. For information on categories of offences and types of penalties, students should refer to Policy 71, Student Discipline. For typical penalties, check Guidelines for the Assessment of Penalties.

Appeals: A decision made or penalty imposed under Policy 70, Student Petitions and Grievances (other than a petition) or Policy 71, Student Discipline may be appealed if there is a ground. A student who believes they have a ground for an appeal should refer to Policy 72, Student Appeals.

Note for students with disabilities: AccessAbility Services, located in Needles Hall, Room 1401, collaborates with all academic departments to arrange appropriate accommodations for students with disabilities without compromising the academic integrity of the curriculum. If you require academic accommodations to lessen the impact of your disability, please register with AccessAbility Services at the beginning of each academic term.

Turnitin.com: Text matching software (Turnitin®) may be used to screen assignments in this course. Turnitin® is used to verify that all materials and sources in assignments are documented. Students' submissions are stored on a U.S. server, therefore students must be given an alternative (e.g., scaffolded assignment or annotated bibliography), if they are concerned about their privacy and/or security. Students will be given due notice, in the first week of the term and/or at the time assignment details are provided, about arrangements and alternatives for the use of Turnitin in this course.

It is the responsibility of the student to notify the instructor if they, in the first week of term or at the time assignment details are provided, wish to submit alternate assignment.