Syllabus: ECON 483 Topics in Game Theory
Winter 2014
January 12, 2014
Instructor:
Prof. Joel N. Blit
Office: Hagey Hall 206
Email: jblit@uwaterloo.ca (please email rather than phone)
Office Hours: Mondays
Due Date: Tuesday Jan 28, 2014 (at noon)
ECON 483
Prof. Joel Blit
Exercise 3: Bidding for a Jar of Pennies
IMPORTANT NOTE: in order to participate in this exercise you must attend class on
January 27th to
Due Date: Thurs January 23 @ 11pm
ECON 483
Prof. Joel Blit
Exercise 2: Bidding for a Dollar
Description
You are bidding for a dollar in a competitive sealed bid auction. You and each of
your classmat
Due Date: Th March 6 @11pm
ECON 483
Prof. Joel Blit
Exercise 4: Eating Cookies
Description
Bert and Ernie like to eat cookies. The more cookies they eat the happier they are.
There are 40 cookies
Econ 483:
Topics in Game Theory
Lecture 1: Introduction
(Chapter 1)
Economics 483 - Topics in
1
Game: Bidding for a Dollar
English auction
Must bid in increments of 1
Highest bidder gets $1
The two highest bidders (winner and
runner up) pay their last bid
Econ 483:
Introduction to Game Theory
Lectures 21 & 22:
Repeated Games (14)
ECON 483 - Introduction
1
2 Reminders
Exercise 5 is due this evening @11pm
Pick up solutions to starred problems
ECON 483 - Introduction
2
Outline
Today
Discounting
Definition of
Econ 483:
Introduction to Game Theory
Lecture 6:
Bertrand and Electoral
Competition Models
ECON 483 - Introduction
1
(Sections 3.2 and 3.3)
Exercise 2: Bidding for $1
ECON 483 - Introduction
2
Bertrands Model of Oligopoly
Bertrands Model of Oligopoly addr
Econ 483:
Introduction to Game Theory
Lectures 19 & 20:
Bayesian Games (9.1, 9.2)
ECON 483 - Introduction
1
Motivation
So far we have examined games where
both players are perfectly informed about
the game
But in many situations this may not be
realistic
Econ 483:
Introduction to Game Theory
Lecture 17&18:
Bargaining (16.1, 16.3)
ECON 483 - Introduction
1
Examples of Bargaining
Bert and Ernie bargaining over cookies
Buyer and seller bargaining over the price
of a car
Capitalist and workers bargaining over
Econ 483:
Introduction to Game Theory
Lecture 14:
Nash Equilibrium in
Extensive Games (5.3)
ECON 483 - Introduction
Subgame Perfect1
Last Time
Definition of Extensive Games
Terminal histories
Player function
Strategies
Outcomes
ECON 483 - Introduction
2
T
Econ 483:
Introduction to Game Theory
Lecture 16:
Ultimatum Game and
Holdup (6.1)
ECON 483 - Introduction
1
Lets Play a Game!
Im going to try to give away $5!
ECON 483 - Introduction
2
The Game
The game is as follows:
You will be put in random pairs and y
Econ 483:
Introduction to Game Theory
Lecture 15:
Stackelberg Model of
Duopoly (6.2)
ECON 483 - Introduction
1
Models of Oligopoly
In the Cournot and Bertrand models of
oligopoly each firm chooses its action not
knowing the other firms action (they move
s
Econ 483:
Introduction to Game Theory
Lecture 13:
Definition of Extensive
Games (5.1-5.2)
ECON 483 - Introduction
1
Extensive Games with Perfect
Information
Definition of Extensive Games
Terminal histories
Player function
Strategies
Outcomes
ECON 483 - In
Econ 483:
Introduction to Game Theory
Lecture 2: Strategic
Games
(Sections 2.1-2.5)
ECON 483 - Introduction
1
ECON 483 - Introduction
2
ECON 483 - Introduction
3
Monty Hall
You have a chance to win $5!
I have set up three doors: one has $5 the
other two h
Econ 483:
Introduction to Game Theory
Lecture 12:
MSNE Illustrations
Reporting a crime (4.8)
ECON 483 - Introduction
1
Illustrations of MSNE
Expert Diagnosis
Reporting a crime
ECON 483 - Introduction
2
Problem: Reporting A Crime
A crime is observed by n p
Econ 483:
Introduction to Game Theory
Lecture 10:
Mixed Strategy Equilibrium
II
ECON 483 - Introduction
1
(Sections 4.3.4 4.5 )
Solving for MSNE
So far we have used best response
functions to determine the set of mixed
strategy Nash equilibria
Unfortunate
Econ 483:
Introduction to Game Theory
Lecture 9:
Mixed Strategy Equilibrium
(Sections 4.1- 4.3.3)
ECON 483 - Introduction
1
Rock Paper Scissors
Rock beats Scissors
Scissors beats Paper
Paper beats Rock
ECON 483 - Introduction
2
Rock Paper Scissors
What ac
Econ 483:
Introduction to Game Theory
Lecture 8:
First Price Auction (Section
3.5.3)
ECON 483 - Introduction
1
First-Price Sealed Bid Auction
Bidders simultaneously put their bid in a
sealed envelope
The highest bidder wins and pays his bid
Note: this gam
Econ 483:
Introduction to Game Theory
Lecture 7:
Second Price Auction
(Section 3.5)
ECON 483 - Introduction
1
Auctions
Auctions have been around for at least
2500 years!
In ancient Babylonia women were auctioned
off for marriage
In ancient Athens the righ
Econ 483:
Introduction to Game Theory
Lecture 5:
Cournot Model
(Sections 3.1)
ECON 483 - Introduction
1
Cournots Model of Oligopoly
Cournot model allows us to examine how
the industry equilibrium (prices and
quantities) responds to
changes in demand
chang
Econ 483:
Introduction to Game Theory
Lecture 3: Nash
Equilibrium
(Sections 2.6 and 2.7)
ECON 483 - Introduction
1
Solving the Games
It would be nice to be able to say
something about the outcomes of these
games
In particular, what actions will be chosen
Econ 483:
Introduction to Game Theory
Lecture 4: Best
Response Functions
Strict and Weak
ECON 483 - Introduction
Domination 1
Best Response Function
We are interested in determining the best
actions for a player given the actions of
the other players
For
Professor Joel Blit
ECON 483
Winter 2014
Feb 24th, 2014
Your Name:
Your Student Number:
DO NOT OPEN THE EXAM UNTIL YOU ARE TOLD TO DO SO
YOU MAY NOT HAVE ANYTHING WITH YOU EXCEPT FOR A PEN/PENCIL,
RULER, AND AN ERASOR: NO CALCULATORS, NO PHONES, ETC.
PLEA
Professor Joel Blit
ECON 483
Fall 2013
Oct 22nd, 2013
MIDTERM SOLUTIONS
DO NOT OPEN THE EXAM UNTIL YOU ARE TOLD TO DO SO
YOU MAY NOT HAVE ANYTHING WITH YOU EXCEPT FOR A PEN/PENCIL,
RULER, AND AN ERASOR: NO CALCULATORS, NO PHONES, ETC.
PLEASE ENSURE THAT Y
Due Date: Mon March 31st 11pm
ECON 483
Prof. Joel Blit
Exercise 5: Finitely Repeated Prisoners Dilemma
Description
You are going to play the following strategic game where your choice of actions are
C (c
Due Date: Thursday January 9th @ 11pm
ECON 483
Prof. Joel Blit
Exercise 1: Choosing 2/3 of the Average
Description
You are going to play a game against your classmates. In this game you and each of