Two - Year Master Degree in Economics

The course provides a mathematical treatment of choice under uncertainty and game theory. We will develop and solve formal models of strategic interactions among economic agents. We will consider several economic applications, such as imperfect competition, auctions, public goods and bargaining.

The students will learn about strategic thinking and its implications. They are also expected to master all the tools presented during the course.

Lectures and problem sets with solutions (the problem sets will not be graded).

Closed-booked written exam (two hours).

The exam will consist of a few questions and/or problems. The mark assigned to each question/problem will depend on the level of difficulty.

Office hours.

I. Introduction.

II. Decision Theory.

Dominance, beliefs and "Never Weak Best Response" strategies.

III. Strategic Form Games

Dominance, Nash equilibrium, mixed strategies.

IV. Extensive Form Games

Corresponding strategic forms, behavioral strategies, backwards induction, subgame perfect equilibrium.

V. Games of Incomplete Information

Normal-form representation of static games of incomplete information, Bayesian Nash equilibrium, perfect Bayesian equilibrium.

VI. Repeated Games

Folk theorems.

VII. Mechanism Design

Design of the optimal auction, the revenue equivalence theorem.

Martin J. Osborne: An Introduction to Game Theory, Oxford University Press.