Economics 703: Advanced Microeconomics [ Syllabus ]

Professor Peter Cramton

Tuesday and Thursday, 9:30 am to 10:45 am, Tydings 0111, Fall 2013

Presents a formal treatment of game theory. We begin with extensive-form games. A game tree is defined, as well as information sets and pure, mixed and behavioral strategies. Existence of Nash equilibria is discussed. We then turn to the analysis of dynamic games, covering repeated games, finitely repeated games, the folk theorem for repeated games, subgame perfection, and punishment strategies. Next, games with incomplete information are studied, including direct revelation games, concepts of efficiency, and information transmission. Several refinements of Nash equilibria are defined, such as sequential equilibria and stable equilibria. The analysis of enduring relationships and reputations is covered. The course concludes with a discussion of two important applications of game theory: auctions and bargaining. The topics include sealed-bid auctions, open auctions, private valuation and common valuation models, the winner’s curse, auction design, bargaining with incomplete information, and combinatorial auctions.

Changes to Regular Class Schedule

No class days:

Tuesday, Sep 17
Thursday, Oct 3
Tuesday, Oct 8
Thursday, Oct 10
Thursday, Nov 21

Double class days (class starts at 8:10am):

Tuesday, Sep 10
Thursday, Sep 19
Tuesday, Sep 24
Tuesday, Oct 1
Tuesday, Nov 19


Course Materials

There are a number of simple web exercises that are helpful in motivating the course material and understanding the assumptions of the theory. The web exercises and due dates are shown below; once the due date has passed the results will be made available at the links below for each web exercise:

Web Exercises, available at http://gametheory.tau.ac.il/student/ course number 2269, class password 4556
1. Introductory Games, due Sep 5
2. Classical Matrix Games, due Sep 10
3. Finite Horizon Games, due Sep 12
4. Ultimatum and Dictator Games, due Sep 19
5. Bargaining and Auctions, due Sep 24 [Gneezy-Smorodinsky 2006]

The lecture notes, slides, problem sets, and answers (once available after the due date) are all available below:

Lecture Notes Slides
  1. Foundations
  2. Dynamics
  3. Mechanism Design
  4. Refinement
  5. Signaling
  6. Auctions, Reputations, and Bargaining
  7. Demand Reduction
  8. Optimality of Being Efficient
  9. Clock-Proxy Auction
  10. Combinatorial Auctions
  11. Spectrum Auction Design
  12. High Frequency Trading Arms Race
  1. Foundations
  2. Dynamics
  3. Mechanism Design
  4. Refinement
  5. Signaling
  6. Auctions, Reputations, and Bargaining
  7. Auctioning Many Similar Items
  8. Auctions with Resale
  9. Practical Auction Design
  10. Spectrum Auction Design
  11. Incentive Auctions
  12. High Frequency Trading Arms Race
Problem Sets Problem Set Answers
  1. Problem Set 1 due Sep 19
  2. Problem Set 2 due Sep 26
  3. Problem Set 3 due Oct 15
  4. Problem Set 4 due Oct 24
  5. Problem Set 5 due Nov 7
  6. Problem Set 6 due Nov 14
  7. Problem Set CV Auction due Nov 19
  8. Problem Set 7 due Nov 26
  9. Problem Set 8 not assigned
  10. Problem Set 9 due Dec 5 (problems 1-3 only)
  11. Problem Set 10 due Dec 12
  1. Answers 1
  2. Answers 2
  3. Answers 3
  4. Answers 4
  5. Answers 5
  6. Answers 6
  7. Answers CV Auction
  8. Answers 7
  9. Answers 8
  10. Answers 9
  11. Answers 10

Other Materials
Vayanos RESTUD 1999, strategic-trading-in-dynamic-market