Game Theory I   

I started from scratch, but thanks to Prof. Fox and his devotion to the success of his students, I am now not only able to understand, but solve some of the most complicated game theory problems. I highly recommend this intensive course. — participant from South Africa

Game theory use mathematical models to analyze the choices made by individuals, where the wellbeing of any one individual depends not only upon their own choices, but also upon the choices of others. It has proven to be an extremely useful tool for analyzing all types of strategic interaction and in refining our understanding of a wide variety of phenomena of interest to scholars in economics, political science, sociology, and related social sciences. Game theory is also prevalent in the public and private sectors, where it is used to inform business and government decisions, ranging from national security to antitrust policies.

This one-week course is the first of a two-course sequence (cf. Game Theory II) and introduces the basics of both decision and game theory with a focus on the techniques that game theorists use to analyze ‘perfect information’ settings in which individuals know the goals and motivations of those they are interacting with. It is geared towards participants, who have limited to no prior exposure to game theory.


Dates

This one-week, 20-hour course runs Monday-Friday, 9:00 am-1:00 pm, June 19-23, 2017.


Instructor

Justin E. Fox (picture), Washington University in St. Louis


Detailed Description

This one-week course teaches participants how to use game theory to analyze strategic interactions in settings with perfect information, i.e., settings in which each individual knows the goals and motivations of all other individuals they are interacting with.

The first section of the course analyzes settings where individuals have to decide what actions to choose in the absence of directly observing the choices of others. A classic example of such a setting is voting under the secret ballot. Participants are introduced to the central solution concept of game theory, known as the Nash equilibrium, and learn about two canonical models of competition. This section concludes with the exploration of various mechanisms that allow groups to overcome so-called free-rider problems that are frequently encountered in real-life settings.

The course's second and final part analyzes scenarios where individuals have the opportunity to observe the actions of others prior to deciding what action to take. A classic example of such a setting is take-it-or-leave-it bargaining, where one player makes an offer and the other player can then respond by accepting or rejecting that offer. We consider the difference between credible and non-credible threats and introduce a refinement of the Nash equilibrium, known as subgame perfect equilibrium. In this part of the course, we also study a variety of bargaining models, including models of legislative bargaining and the bargaining model of war. Finally, participants are introduces to models of delegation, such as the delegation of authority from one actor to another.

Key topics covered by this course include:

  • Optimal decision-making with and without uncertainty (using both analytical and computational methods)

  • Simultaneous move games and sequential move games under conditions of perfect information

  • Equilibrium analyses, e.g., Nash equilibrium and subgame perfect equilibrium

  • Welfare analysis, e.g., Pareto efficiency


Class meetings generally focus on both theory and applications. Examples of the political, economic, and social phenomena covered include the prisoner's dilemma, voting, public goods and the tragedy of the commons, fundraising, competition among political candidates, firms, and nations, and bargaining in a wide variety of settings.

Participants will learn how to use the free mathematical software Mathics to solve hands-on exercises and problem sets.


Prerequisites

There are no prerequisites for this course. The course assumes no mathematical knowledge beyond basic algebra.


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

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


Suggested Readings

Gibbons, Robert. 1997. An Introduction to Applicable Game Theory. Journal of Economic Perspectives 11: 127-149.

Fearon, James D. 1995. Rationalist Explanations for War. International Organization 49: 379-414.

Eskridge, William N., and John Ferejohn. 1992. The Article I, Section 7 Game. Georgetown Law Review 80: 523-564.


Register Now