Since the 1970s, questions about material supply and demand have become less central in economics, and questions about human interactions and information have become more central. Game theory provides the basic tools for investigating the societal inefficiencies due to selfish strategic behavior of individuals, and ways to minimize those inefficiencies. In its first years, game theory was purely theoretical, so as to develop its basic concepts. It was later extended to experimental economics, and nowadays its tools are used in virtually every economic discipline. The course provides a framework for the analysis of situations of conflict. Emphasis is put on the modelling of situations of strategic interaction. Through the lens of the distinct notions of equilibria, the course offers ways to restrict the set of possible outcomes in games. The course discusses many well-known examples of strategic interaction.
The teacher will produce his own lectures based mainly on the following literature:
- Osborne, Martin J. and Ariel Rubinstein (1994): A Course in Game Theory. MIT Press. Available digitally from https://books.osborne.economics.utoronto.ca
- Myerson, Roger B. (1991): Game Theory: Analysis of Conflict. Harvard University Press.
- Tadelis, Steven (2013). Game Theory: An Introduction. Princeton University Press, Princeton, NJ. (Very didactical, but too elementary for this course. Good background if this course is at first sight difficult.)
Further Optional Reading
- Peters, Hans J.M. (2015): Game Theory: A Multi-Leveled Approach, 2nd edition. Springer, Berlin.
- Gibbons, Robert (1992): A Primer in Game Theory. Prentice-Hall, London. (Nice casual reading)
- Luce, R. Duncan & Howard Raiffa (1957): Games and Decisions. Wiley, New York. (Deepest book on game theory.)