Course 2024-2025 a.y.

• Introduction to interactive decision theory, terminology, notation.
• Rationality and dominance.
• Rationalizability and iterated dominance.
• Pure strategy Nash equilibrium, interpretation, existence.
• Mixed strategy Nash equilibrium, interpretation, existence.
• Other probabilistic equilibrium concepts: correlated (hints) and self-confirming equilibrium.
• Games with incomplete information: rationalizability, Bayesian games and equilibrium.
• Multistage games: description, strategic form, relevance of applying solutions concepts to the strategic form.
• Rational planning and the one-deviation principle.
• Rationalizability in multistage games, forward induction.
• Subgame perfect equilibrium and backward induction.
• Repeated games and multiplicity of subgame perfect equilibria.
• Bargaining games and uniqueness of subgame perfect equilibrium.
• Multistage games with asymmetric or incomplete information, description, rationalizability, strategic form.
• System of beliefs and perfect Bayesian equilibrium.
• Signaling games, pooling and separating equilibria, foward induction.

• Express strategic interaction and strategic reasoning with the formal language and tools of game theory.
• Define and describe the traditional solution concepts of game theory (Nash equilibrium and its main refinements), explain their limitations, and identify the applications where they are relevant.
• Define and describe new solution concepts like rationalizability and self-confirming equilibrium, and explain their theoretical foundations.

• Analyze situations of economic and social interaction as "games".
• Solve games and predict behavior using traditional as well as new solution concepts.

• Lectures
• Practical Exercises

Students are assigned 8 problem sets containing 5-6 exercises each to be solved at home. Most of these exercises are selected from an exercises book (without solutions) uploaded in BlackBoard. The exercises are graded and the best 4 problem sets out of 8 contribute 20% of the final grade, i.e., at most 6 points out of 30. The solutions of assigned exercises are explained during office hours.

The exercises mix applications of game theory to economic models (e.g., of oligopoly, or bargaining) with proofs of variations of theoretical results contained in the textbook. The exercise book also contains several true/false questions. Such questions are not included in the assigned problem sets, but some of them are discussed in office hours. The goal of these assignments it to let students “learn the theory by doing it.” They do not just require mere calculations. Indeed, they cannot be solved if the students do not have at least a basic understanding of the theory. There are more difficult parts designed to stimulate students’ deeper study and understanding of the theory as well as their critical thinking. Applications to economic models illustrate the far-ranging use of game theoretic tools in modern economic theory.

Doing the exercises is as important as studying the textbook to prepare for the exam.

• Students can either take two partial exams, one on the first part (intermediate partial exam) and one on the second part (final partial exam), or a general exam.
• Individual assignements of exercises are evalutated throughout the course and contribute 20% of the final grade.

Teaching material prepared by the instructor are distributed to the students. They include the updated versions of the following:

• Main body of lecture notes: textbook GAME THEORY, Analysis of Strategic Thinking.
• Exercise book: GAME THEORY, Analysis of Strategic Thinking: Exercises.
• All the slides used in the lectures.