Game Theory (Econ 309, Spring 2003)

Tuesday & Thursday 1:00PM-2:15PM, Machmer W23

Jung-Kyoo Choi Office: Thompson 628 Email: jungk@econs.umass.edu Webpage: http://www-unix.oit.umass.edu/~jungk Office Hour: Wed 10:00AM-12:00PM

Overview
The goal of this course is to introduce student to an elementary yet rigorous level of the core of game theory. This course analyzes social institutions and strategic behavior, using the analytical tools of evolutionary game theory. The course is composed of two parts. The first part of the course is based on lecture. From this part, you will learn basic tools and models of game theory (by lots of practice!). The second part is based on group projects. Doing group projects, you will have chances to apply game theoretic models to various topics in behavioral sciences.

Prerequisite
Introductory microeconomics (ECON 103) AND introductory mathematics or calculus (MATH 127 OR MATH 131 OR MATH 135). Exceptions will be made for persons with particularly strong backgrounds in relevant field.

Textbooks (The books with * are required)

Herbert Gintis, Game Theory Evolving, Princeton University Press, 2000* This book has been ordered through the UMass Textbook Annex. One copy is also available on reserve in the library. Brian Skyrms, Evolution of the Social Contract, Cambridge Univ. Press, 1996. One copy is available on reserve in the library. Even thought this book is not a required textbook, I strongly recommend this book because it is very good reference for the group projects. Some chapters of this book directly deal with the topics given to group projects. Ken Binmore, Fun and Games, D.C.Heath & Co, 1992. Avinash K. Dixit and Barry J. Nalebuff, Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, Norton, 1993.

Course Requirement
Two Midterms and Final (each counts 20% of the final grade) Group Project (20%) Problem Sets (10%) Attendance/Participation(10%)

Exams
Two midterm exams will be given in regular classes. First midterm exam will be on Thursday, Feb. 27th. Second midterm exam will be on Thursday, Apr. 3rd. The final will be given during the university final exam period. The final exam is not cumulative. Exams will be problem-oriented and will test whether you fully understand important concepts. The exams will be very similar to the problems in problem sets. In the final exam, there will be at least one question for testing whether everyone understands his/her group projects well. More detailed information will be given before each exam. Please ensure that make-up exams will only be given in case of medical emergency, bereavement or in accordance with the university regulations concerning exam conflicts. Please note that no exceptions will be made.

Problem Sets
There will be 5 homework assignments, each of which will be given after finishing one or two chapter(s). The homework is an essential part of the course. By working on problem sets, you become more familiar with the topics that you learn. Also you will have a chance to apply the concepts and tools developed in the course to various game theoretic situations. Since exams exclusively test whether you can apply the concepts and tools presented in the lecture, it is impossible to do well in the course without doing the homework.

Group Projects
Every student must join one of the group projects. I will pass around sign-up sheet in order to assign students to one of 5 groups, and more detailed information (including description, reading list). The five topics are as following; 1. Justice or Fairness as an Evolutionary Outcome. 2. Homo Economicus Or Homo Reciprocan?: A Result from Ultimatum Game Experiments. 3. Why Are You Using Windows Instead of Linux? (PC instead of Mac, QWERTY instead of Dvorak, VHS instead of Beta): Path Dependency and Lock-In in Technology. 4. Property Rights as a Spontaneous Order. 5. Why Do People Free-Ride? Why Do People Cooperate? Doing a group project is a collaborative study, so I strongly encourage you to schedule your regular group meetings and to actively participate in your group meetings. In addition to group meetings, I will schedule meeting time with each group (at least three times). In a meeting, you are expected to report the progress of your group project. Group project presentations have been scheduled (see course schedule p. 3). After the presentation, each group should submit one paper (more than 4 pages and less than 7 pages with single space).

Using Website
I will upload the class materials (course syllabus, some lecture notes, some information) on my website. The URL of the site is http://www-unix.oit.umass.edu/~jungk. There is a section named Teaching Courses. I hope you can get as much information as you need from the website.

Course Schedule
Date 1/28 1/30 2/04 2/06 2/11 2/13 2/18 2/20 2/25 2/27 Topics Introduction: Game As Strategic Interaction: Definitions and Basic Equilibrium Concepts Definitions and Basic Equilibrium Concepts Dominant and Dominated Strategies Dominant and Dominated Strategies Pure Strategy Nash Equilibria No class Pure Strategy Nash Equilibria Pure Strategy Nash Equilibria 1st Midterm Reading Assignment None Ch. 1 Ch. 1 Ch. 2 Ch. 2 Ch. 3 No class Ch. 3 Ch. 3

3/04 Mixed Strategy Nash Equilibria Ch. 4 3/06 Mixed Strategy Nash Equilibria Ch. 4 3/11 Mixed Strategy Nash Equilibria Ch. 4 3/13 Mixed Strategy Nash Equilibria Ch. 4 3/18 No class 3/20 No class 3/25 Credible Threats and Subgame Perfection Ch. 5 3/27 Credible Threats and Subgame Perfection Ch. 5 4/01 Credible Threats and Subgame Perfection Ch. 5 nd 4/03 2 Midterm 4/08 Repeated Games Ch. 6 4/10 Repeated Games Ch. 6 4/15 Repeated Games Ch. 6 4/17 Evolutionary Game Theory Ch. 7 4/22 Evolutionary Game Theory Ch. 7 4/24 Evolutionary Game Theory Ch. 7 4/29 Group Project Presentation: Topic I Ch. 11 5/01 Group Project Presentation: Topic II Ch. 11 5/06 Group Project Presentation: Topic III Ch. 11 5/08 Group Project Presentation: Topic IV Ch. 11 5/13 Group Project Presentation: Topic V Ch. 11 * The schedule may change to adjust the course procedure.