ECON0059 - Advanced Microeconomic Theory

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Aims:
In this course we shall analyze strategic behaviour of rational decision makers in situations of conflict or other interaction. We say that decision making is strategic if it involves taking into account what other agents want, know, believe and do. Strategic behaviour is an important component in interactions such as market competition between firms, bilateral bargaining, auctions, voting, information transmission, etc. Game Theory is a name for a collection of analytic tools that economists use to understand strategic interactions. In this course we will introduce some of these tools: strategic-form games with complete information, strategic-form games with incomplete information, dynamic games, equilibrium concepts for analyzing these games. We will present many economic applications of these tools as well as some behavioural evidence.

Course outline:

1. Static games with complete information: Nash equilibrium, mixed-strategy equilibrium, experiments and behavioural models
2. Alternative solution concepts: max-minimization (with application to zero-sum games), rationalizability
3. Static games with incomplete information: type spaces, Bayesian games, Bayesian Nash equilibrium, applications (voting, auctions, speculative trade, strategic “contagion”)
4. Dynamic games with complete information: subgame perfect equilibrium, repeated games, dynamic oligopoly