Game Theory

by Klaus Ritzberger (VGSF)
mandatory course
6 ECTS

PREREQUISITES:

Knowledge of mocroeconomics incl. of general equilibrium

LEARNING OBJECTIVES:

The goal is to introduce the basic concepts from game theory, both intuiuively and at a formal level. Furthermore, important applications of game theory to economic problems will be discussed.

COURSE CONTENT:

Introduction: What is a game? Simple examples, basic assumption.
Games in Extensive Form: Perfect and imperfect information, the tree strategies (pure, mixed, and behavioral strategies), perfect recall (Kuhn' theorem), Bayesian games (incomplete information).
Games in Normal Form: Normal form games, Thompson transformation, the space of games.
Solving Games: Dominance (weak and strict dominance), rationalizable strategies, Nash equilibrium, zero-sum games, correlated equilibrium.
Applications: Oligopoly (Cournot, Bertand, differentiated commodities), repeated games, mechanism design, principal-agent problems, signaling, adverse selection and moral hazard, auction.

OBLIGATORY LITERATURE:

Ritzberger, K. (2002), Foundations of Non-Cooperative Game Theory, Oxford University Press

Osborne, M. J., and Rubinstein, A. (1994), A Course in Game Theory, chp. 10, MIT Press

Friedman, J. W. (1986), Game Theory with Applications to Economics, chp. 3, Oxford University Press

Kreps, D. M. (1990), A Course in Microeconomic Theory, chp. 10, 16, 17, Harvester-Wheatsheaf

TIME SCHEDULE:

will take place in summer term 2011

GRADING:

Problem Sets: 20%
Midterm exam: 35%
Final exam: 45%

LOCATION:

Institute for Advanced Studies, Vienna SFG ... Schottenfeldgasse 29/1/3F
HS 2...Stumpergasse 56, 1060 Wien