ECO 75 Game Theory: Individual Choices and Group Outcomes

Description: If the well-being of each member of some group depends not only on his/her own choices but also on the choices of the other members of the group, then this group is said to be "playing a game". Game Theory attempts to predict the choices of rational game players and the consequent group outcome. Game Theory also seeks to judge the quality of this group outcome. For instance, it asks whether the rational pursuit of self-interest can be self-defeating.

Although the first book devoted to Game Theory--Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern--was published only in 1943, Game Theory has already become a major source of analytical concepts and techniques for disciplines such as politics, international relations, economics, business and even biology.

This course weaves familiar, real-world examples of the use of strategy into more general analyses of strategies in various game-like situations. Students taking this course should expect to acquire superior strategic skills as well as a deeper understanding of the emergence and functioning of social institutions.

Topic Outline: Sequential and simultaneous move games, zero-sum and non-zero-sum games, one-shot and repeated games, repeated games with the same opponents and with changing opponents, complete and incomplete information games, games with fixed rules and games with manipulable rules, games with and without enforceable cooperation, evolutionary games, collective action games, the strategic use of threats, voting behavior, bidding strategy and auction design, bargaining, markets and competition.

Pre-Requisites: Ability to handle high school algebra, while not essential, will be helpful.

Spring semester. 3 credits.