Game Theory

Module code: EC7089

Game theory is a mathematical method used to analyse situations of interactive decision-making. Almost every social situation that you may think of - whether it is about trade, politics, wars and other conflicts, or just collective decision making – involves a group of individuals interacting in a way such that the welfare of each person in the group depends on the actions taken by one or more people from that group. This interaction is a crucial aspect of these situations: the best (optimal) action for one person will often depend on what actions others are taking.

Game theory has been used to study situations such as firms dealing with each other, pricing policies of businesses, bidding in auctions, voting in elections and many others events. Throughout the semester we will use plenty of such examples and applications as we develop the analytical concepts.

Topics covered

• Strategic Form Games with finite and infinite action spaces. Mixed strategies
• Nash Equilibrium. A gentle introduction to Fixed Point Theory
• Strategic Form Games with incomplete information
• Bayesian Nash Equilibrium
• Extensive Form Games
• Brief introduction to the concept of equilibrium refinement
• Sequential and Perfect Bayesian Equilibrium