Part A (Game Theory).
The first part of this course presents a general introduction to game theory. Students are introduced with some of the most important solution concepts, and results of game theory, as well as the methodological principles that have guided the development of the theory. This course is organized around the following models (i.e., game representations): Games in normal form, games in extensive form, games with incomplete information, and games in characteristic function form. The course covers a selected list of solution concepts: Strategic dominance, Nash equilibrium, subgame perfect Nash equilibrium, Bayesian equilibrium, (weak) perfect Bayesian equilibrium, Nash bargaining solution, core, and Shapley value.
Part B (Information Economics)
The second part of the course will cover some selected topics on economics of information. The core part will be based on Mas-Colell, A., M. Whinston and J. Green (1995) ch. 13 and 14.
Of ch.13, we cover adverse selection, signaling, and competitive screening. With ch. 14, we introduce the principal agent’s model with hidden actions (moral hazard) and hidden characteristics (monopolistic screening). We will expand on this latter part following the second chapter on adverse selection in Salanie (2005). We may also review the same topics in the book by Jehle and Reny (2010), who use an insurance market application.
Depending on time, we may cover additional topics, such as an introduction to auction theory (based on ch. 2,3 of Krishna (2010)), and/or the Crawford and Sobel (1982)’s cheap talk model.