EC3312 GAME THEORY AND APPLICATIONS TO ECONOMICS
SEMESTER 2, 2016-2017
Assoc Prof Luo Xiao
Department of Economics, National University of Singapore
13 January 2017
EC3312 GAME THEORY AND APPLICATIONS TO ECONOMICS
SEMESTER 2, 2016-2017
Prerequisite:
a mod

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
1 April 2016
A/P Luo Xiao
()
EC3312 - Lecture 10
1 April 2016
1 / 17
Dynamic Games of Incomplete Information
We are now studying

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
25 March 2016 (e-learning)
A/P Luo Xiao
()
EC3312 - Lecture 9
25 March 2016 (e-learning)
1 / 15
An Example: The Model
A rich, hon

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
15 April 2016
A/P Luo Xiao
()
EC3312 - Lecture 12
15 April 2016
1 / 12
Relationships: Various Solution Concepts
Static
Dynamic
Co

A/P Xiao Luo
EC3312 Game Theory and Applications to
Economics
Xiao Luo, Lecturer
Department of Economics, National University of Singapore
5 February 2016
()
EC3312 - Lecture 4
5 February 2016
1 / 15
Example: Matching Pennies
heads
tails
heads
-1, 1
1, -1

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
12 February 2016
A/P Luo Xiao
()
EC3312 - Lecture 5
12 February 2016
1 / 14
Dynamic Games of Complete Information
By complete inf

A/P Luo Xiao
EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
29 January 2016
()
EC3312 - Lecture 3
29 January 2016
1 / 12
Relationship between IESDS and Nash Equilibrium
Conside

EC3312: Tutorial 7 (Answers)
1. By the argument in the lecture, we have that player 1s share s = f (s ) =
1
2
(1
1s
). Thus, s =
1
1
2
1 2
, so the backwards-induction outcome is that,
1
1
in the rst period, player 1 oers the settlement
2
1 2
2 (1
;
1
1)

NATIONAL UNIVERSITY OF SINGAPORE
Department of Economics
2012/2013 (I)
EC3312
Tutorial 7
1. Suppose the players in Rubinsteins innite-horizon bargaining game have
dierent discount factors: 1 for player 1 and 2 for player 2. Adapt the
argument in the lectu

EC3312: Tutorial 5 (Answers)
1. (a) An information set for a player in a game is a set of decision nodes that he or
she cannot distinguish among. (If an information set is a singleton, the player
is not confused in that information set.) Player 3 has two

EC3312: Tutorial 9 (Answers)
1. (1.1) Firm is action space: Ai = fpj p
0g.
(1.2) Firm is type space: Ti = fH; Lg.
(1.3) Firm is beliefs about
is types: H + (1
)L.
(1.4) Firm is strategy space: Si = fpiH piL j piH ; piL 2Ai g.
(1.5) Firm is expected utilit

NATIONAL UNIVERSITY OF SINGAPORE
Department of Economics
2012/2013 (II)
EC3312
Tutorial 8
1. Consider a Cournot duopoly operating in a market with inverse demand
P (q1 ; q2 ) = a q1 q2 , where qi is the quantity chosen by rm i. Both
rms have total costs c

NATIONAL UNIVERSITY OF SINGAPORE
Department of Economics
2012/2013 (II)
EC3312
Tutorial 10
1. Consider the following extensive-form game. In the game tree, the number
at the top below each of the terminal nodes is the payo to player 1 and
the number at th

A/P Luo Xiao
EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
19 February 2016
()
EC3312 - Lecture 6
19 February 2016
1 / 18
Extensive-Form Representation
The extensive-form repr

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
8 April 2016
A/P Luo Xiao
()
EC3312 - Lecture 11
8 April 2016
1 / 14
Application: The Market for Lemons
Akerlofs (1970) Model:
A

EC3312 Game Theory and Applications to
Economics
Xiao Luo, Lecturer
Department of Economics, National University of Singapore
1 February 2017
A/P Xiao Luo
()
EC3312 - Lecture 4
1 February 2017
1 / 15
Example: Matching Pennies
heads
tails
heads
-1, 1
1, -1

EC3312: Tutorial 3 (Answers)
1. (1) Let p1 = (r; 1
r) and p2 = (q; 1
q) where player 1 plays T with probability
r and player 2 plays L with probability q. For player 2s mixed strategy p2 , player
1s expected payos from T and B are:
v1 (T; p2 ) = 2
v1 (B;

EC3312 GAME THEORY AND APPLICATIONS TO ECONOMICS
SEMESTER 2, 2015-2016
Assoc Prof Luo Xiao
Department of Economics, National University of Singapore
20 January 2017
Assessment:
50% Continuous Assessment
(40% Midterm Examination; 10% Assignments & Tutorial

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
20 January 2017
A/P Luo Xiao
()
EC3312 - Lecture 2
20 January 2017
1 / 15
Topics
Static
Dynamic
Complete Information
Normal-form

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
10 February 2017
A/P Luo Xiao
()
EC3312 - Lecture 5
10 February 2017
1 / 14
Dynamic Games of Complete Information
By complete inf

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
27 January 2017
A/P Luo Xiao
()
EC3312 - Lecture 3
27 January 2017
1 / 12
Relationship between IESDS and Nash Equilibrium
Conside

EC3312 GAME THEORY AND APPLICATIONS TO ECONOMICS
SEMESTER 2, 2015-2016
Assoc Prof Luo Xiao
Department of Economics, National University of Singapore
15 January 2016
EC3312 GAME THEORY AND APPLICATIONS TO ECONOMICS
SEMESTER 2, 2015-2016
Prerequisite:
a mod

A/P Luo Xiao
EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
18 March 2016
()
EC3312 - Lecture 8
18 March 2016
1 / 17
Static Bayesian Games
static (= one-shot, simultaneous-move

A/P Luo Xiao
EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
12 February 2016
()
EC3312 - Lecture 5
12 February 2016
1 / 14
Dynamic Games of Complete Information
By complete inf

A/P Luo Xiao
EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
22 January 2016
()
EC3312 - Lecture 2
22 January 2016
1 / 15
Topics
Static
Dynamic
Complete Information
Normal-form

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
19 February 2016
A/P Luo Xiao
()
EC3312 - Lecture 6
19 February 2016
1 / 18
Extensive-Form Representation
The extensive-form repr

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
18 March 2016
A/P Luo Xiao
()
EC3312 - Lecture 8
18 March 2016
1 / 17
Static Bayesian Games
static (= one-shot, simultaneous-move

EC3312 Game Theory and Applications to
Economics
Luo Xiao, Lecturer
Department of Economics, National University of Singapore
11 March 2016
A/P Luo Xiao
()
EC3312 - Lecture 7
11 March 2016
1 / 13
Repeated Games
A repeated game is a dynamic game in which t

NATIONAL UNIVERSITY OF SINGAPORE
Department of Economics
2012/2013 (II)
EC3312
Tutorial 9
1. Consider the following asymmetric-information model of Bertrand duopoly
with dierentiated products. Demand for rm i is qi (pi ; pj ) = a pi + bi pj .
Costs are ze