Game Theory

Great professor! He is extremely good at articulating and helping us make sense of the abstract concepts and methods. — participant from China

Game theory is used to study strategic interactions. Whenever the choices made by two or more actors have an effect on each other’s gains or losses, and hence their actions, the interaction between them is game-theoretic in nature. Game theory can be applied in a wide variety of settings. For instance, the decision to join an international agreement or alliance is a strategic choice that can have an impact on matters of war and peace, trade and investment, etc. The basic objectives of this course are twofold. First, it introduces participants to the basic concepts of non-cooperative game theory. Second, it shows how game theory is used in the social sciences and how it allows researchers to solve problems that involve strategic interaction. A wide array of examples and applications are studied and discussed throughout the course.


Dates

This course was offered in 2013.


Instructor

Peter Rosendorff (picture), New York University


Detailed Description

Whenever the choices made by two or more actors have an effect on each other’s gains or losses, and hence their actions, the interaction between them is strategic. Game theory is used to study such strategic interactions. To introduce participants to all the basic concepts of non-cooperative game theory, the course is divided into four sections. In each section participants study the relevant theory, develop the necessary insights and intuitions for the key theoretical results, and then apply these methods and ideas to a problem drawn from the social science literature. To provide participants with hands-on experience, a wide array of tangible examples and applications are studied and discussed throughout the course.

The first section focuses on the key elements of decision theory and the axiomatic foundations of individual utility maximization. The second section investigates games in the normal form. Participants learn how to define Nash equilibria in pure and mixed strategies and in discrete and continuous strategy spaces. These ideas and concepts are further investigated and their application is practiced using such examples as the spatial model of electoral competition, the median voter theorem, international trade and cooperation, and jury voting.

The third section of the course explores extensive form games of complete information with discrete and continuous actions. It introduces subgame perfection as an equilibrium concept. Participants learn about backwards induction and study how game theory can provide us with a better understanding of such diverse issues as ‘credible threats,’ agenda control, coalition formation, and democratic transition.

In its fourth section, the course turns to incomplete information and repeated games. Participants learn about Bayes-Nash and perfect Bayesian equilibria, which we further explore in the context of such phenomena as reputation, information cascades, political business cycles, and delegation. We also explore pooling and separating equilibria in signaling games and use these ideas to investigate entry deterrence, trade wars, and lobbying.

By the end of the course, participants should not only be familiar with the basic concepts of non-cooperative game theory, but be able to apply game theory to their own research questions and to solve a wide array of problems that involve strategic interaction.


Prerequisites

There are no prerequisites for this course.


Requirements

Participants are expected to bring a WiFi-enabled laptop computer. Access to data, temporary licenses for the course software, and installation support will be provided by the Methods School.


Core Readings

McCarty, Nolan, and Adam Meirowitz. 2007. Political Game Theory: An Introduction. New York, NY: Cambridge University Press.

Osborne, Martin J. 2004. An Introduction to Game Theory. Oxford: Oxford University Press.


Suggested Readings

Denzau, Arthur T., and Michael C. Munger. 1986. Legislators And Interest Groups: How Unorganized Interests Get Represented. American Political Science Review 80: 89-106.

Feddersen, Timothy, and Wolfgang Pesendorfer. 1998. Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts under Strategic Voting. American Political Science Review 92: 23-35.

Gilligan, Michael, Leslie Johns, and B. Peter Rosendorff. 2010. Strengthening International Courts and the Early Settlement of Disputes. Journal of Conflict Resolution 54: 5-38.

Hollyer, James R., and B. Peter Rosendorff. 2011. Why Do Authoritarian Regimes Sign the Convention Against Torture? Signaling, Domestic Politics and Non-Compliance. Quarterly Journal of Political Science 6: 275-327.