Lecture 1 Notes: Economic Preferences
1.1
Alternatives
Consider a set X of alternatives. Alternatives are mutually exclusive in the sense that one
cannot choose two distinct alternatives at the same time. Take also the set of feasible
alternatives exhaust
Lecture 7 Notes: Nash Equlibrium
I assume that you recall the basic solution concepts, namely Nash Equilibrium,
Bayesian Nash Equilibrium, Subgame-Perfect Equilibrium, and Perfect Bayesian
Nash Equilib-rium, from 14.122 very well. In the next two lectures
Lecture 5 Notes: Stochastic Dominance
In this lecture, I will introduce notions of stochastic dominance that allow one to determine the preference of an expected utility maximizer between some lotteries with
minimal knowledge of the decision makers utilit
Lecture 6 Notes: Alias Paradox
In this lecture, I describe some well-known experimental evidence against the expected
utility theory and the alternative theories developed in order to accommodate these
experiments. (I have posted a comprehensive survey on
Lecture 2 Notes: Difficult Decisions
In the previous lecture I considered abstract choice problems. In this section, I will focus on
a special class of choice problems and impose more structure on the decision makers
preferences. I will consider situation
Lecture 4 Notes: Risk Averse
In the previous lecture, we explored the implications of expected utility maximization. In
this lecture, considering the lotteries over money, I will introduce the basic notions
regarding risk, such as risk aversion and certai
Lecture 10 Notes: Information Game
In a complete information game, it is assumed that the players know exactly what other
players payos are. In real life this assumption almost never holds. What would happen in
equilibrium if a player has a small amount o
Lecture 9 Notes: Correlated Equilibrium
In this lecture, I will cover two important equilibrium concepts, namely correlated equilibrium and sequential equilibrium. Correlated equilibrium relaxes the assumption in the
Nash equilibrium that the players mixe
Lecture 8 Notes: Rational Decisions in Game Theory
The definition of a game (N, S, u1, . . . , un) implicitly assumes that
1. the set of players is N, the set of available strategies to a player i is S i, and the
player i tries to maximize the expected va
Lecture 3 Notes: Expected Utilities
In the previous lecture, we considered decision problems in which the decision maker
does not know the consequences of his choices but he is given the probability of each
consequence under each choice. In most economic