EC 306 Game Theory and Applications

EC 306 Game Theory and Applications

Spring 2015 Syllabus

GAME THEORY AND APPLICATIONS

EC 306

Course Syllabus

SPRING 2015

Instructor: / Dmitri Nizovtsev
Office: / 310N in Henderson Center
Phone: / (785) 670-1599
E-mail: /
Meeting Time: / M W F
/ 11 am – 11:50 am
/ HC 103
Office Hours: / M 1:30–3pm, T 3–5pm, F noon–1pm + Open door policy
Required Text: / Harrington, Games, Strategies, and Decision Making, 2nd ed.
Dixit and Nalebuff, The Art of Strategy
Prerequisites: / 54 hours, CM101 or equivalent computer competency,
MA140, MA141 or higher, or consent of instructor[*].

Course Description:

The course is designed to acquaint the student with concepts and tools of game theory and its use in strategic decision making. Applications of game theory to business, social science, political science, and evolutionary biology are also discussed.

Course Objectives:

Upon completion of this course, students will be able to:

1. Demonstrate command of concepts and tools used in classical game theory;

2. Solve a properly defined game by finding its equilibria in pure and/or mixed strategies;

3. Explain and demonstrate the role of informational assumptions on the structure and outcomes of a game;

4. Apply game-theoretic analysis, both formally and intuitively, to various types of social and business interactions;

5. Recognize archetypal strategic situations in complicated real world settings and use adequate tools to solve them.

Grading:

Grades are distributed on a curve based on students’ weighted scores at the end of the semester. The cutoffs for A, B, C, and D I usually use on the curved scale are 90, 80, 70, and 60, respectively. The components of the final score are as follows:

Problem sets and other individual assignments: 25% of the total score.

Term paper: 20% of the total score.

Two midterm exams: 15% of the total score each, for the total of 30%.

Comprehensive final exam: 25% of final score.

The grade appeal procedure can be found on pp. 68-70 of the 2014-2015 Washburn University Catalog.

Homework:

Over the course of the semester, several problem sets will be assigned for either individual or group work. Honoring deadlines is important, therefore late assignments, while still accepted, will result in substantial point deductions. Solutions to problem sets will be discussed in class, handed out, or posted on the class Web page.

Simulations:

It is impossible to study games without actually playing them. Therefore you will have several opportunities to take part in (fairly simple) simulations. Those simulations may be run either online or in class. Participation and performance in those simulations will be rewarded with either points in the problem sets category or extra credit.

Term paper:

Each of you is asked to write a term paper in which you have to present a problem or situation, preferably from the field of knowledge you are majoring in, as a game and analyze it using tools you will have learned in this class. Alternatively, you may choose to perform analysis of a non-trivial game of your choice that was not discussed in class. You will present your findings to the class during the last two weeks of the semester.

I prefer the work on the project to be done in teams of two. Naturally, my expectations of the volume and of work will take into account whether it is a solo or a team paper.

More specific requirements for the term paper will be provided to you separately.

Examinations:

There will be two in-class midterm exams, tentatively scheduled for Feb 23rd and April 6th, and a comprehensive final exam administered during the finals week. Midterm 1 will include all topics covered in the first five weeks. Midterm 2 will be primarily based on the topics covered in weeks 6 through 10. Slight deviations from these guidelines are possible and will be announced later.

Answering test questions may involve plotting graphs and performing calculations. Calculators for the tests are usually provided by the university.

Make-up Policy:

Normally, no make-up tests are given. The most I can do (in the case when you have to miss a test due to significant unforeseen circumstances) is discuss a possibility of redistributing the weights of your final score. Even that is possible only if I have been informed about your absence in a timely manner (before the test, preferably, or within hours after the test).

Any official documentation that may serve as an explanation for missing a test will help your cause.

Attendance:

All students are expected to attend all the class meetings according to the university policy. While I am not going to take attendance, I reserve the right to issue warnings and to take action. Naturally, each student is personally responsible for learning the material covered during the class period that was missed.

Class Participation:

Everyone is strongly encouraged to ask questions and make comments during the class. I hope you will soon discover it is in your best interest to do so as it helps you understand the material covered.

Withdrawal Policy:

During fall and spring semesters, students may go online and withdraw from full semester courses through the second week of class with no recorded grade. From the third through the eleventh week a “W” is recorded for any dropped course. After the eleventh week, there are NO withdrawals, and a grade will be assigned for the course. These deadlines will be different for short-term, out-of-sequence, or summer courses. To view the deadline dates for your courses visit the “Last Day” Deadlines web page at:

https://www2-prod.washburn.edu/self-service/coursedates.php

Depending on the timing of the request to withdraw from a course, students may be responsible for repaying all or a portion of their financial aid. Students who do not attend their courses and fail to officially withdraw themselves will receive a grade of “F” and may also be required to repay all or a portion of their financial aid based on their non-attendance. For further information, contact the Financial Aid Office at 785-670-1151 or e-mail .

Communication and Feedback:

My office hours are listed above. Coming to see me during those hours will probably work the best. However, you can also make an appointment to come see me at any other time, or just drop by when my office door is open.

Since this course is offered infrequently and sometimes undergoes substantial changes between offerings, it may be necessary for me to adjust course content and difficulty on the fly. Please view the course outline provided below as tentative. Also, I am always very willing to hear your comments about the way the class is taught: are we going too fast or too slow, covering too much or too little ground, do you find the difficulty level appropriate for you? If you are uncomfortable discussing these issues in person, you can do it anonymously using a link on the class Web page (see below).

Your Washburn University e-mail address will be the official address used by the University for relaying important messages regarding academic and financial information and the University will consider this your official notification for important information. It may also be used by your instructors to provide specific course information. Students who prefer to use an alternate e-mail address to receive official University notices should make certain they have implemented the mail forward option in Office 365 using the instructions available at http://www.washburn.edu/a-z-index/its/files/training/office365/ForwardEmailOutlookWeb.pdf

It is the student’s responsibility to ensure that the official Washburn e-mail box does not exceed the message quota resulting in the inability of e-mail messages to be accepted into the mailbox.

Web resources:

There will be a Web page for this class at www.washburn.edu/sobu/dnizovtsev/EC306.html where I am going to post assigned readings, homework assignments and answers to them, your current scores, and other materials that can aid you in learning.

Some content will also be provided via the D2L page associated with the course. While I will make every effort to streamline the content delivery, the best practice is to check both sources regularly.

Student Health Services:

Student Health Services (SHS) provides support for students experiencing challenges with learning and adapting to university life. SHS offers urgent care for illness and injury; sports, school, and travel abroad physicals (including TB testing); well woman exams; STD and pregnancy testing; immunizations/vaccinations; and care of chronic illness. Services are provided by Board Certified Advanced Practice Registered Nurses (APRN) who collaborate with WU Student Counseling Services and physicians in the Topeka area. More information can be found at
http://www.washburn.edu/health

WU Counseling Services:

Licensed mental health professionals are available in the Counseling Services’ office for personal, academic, and mental health support. This is accomplished by providing a variety of counseling services as well as resources and referrals to students. More information can be found at http://www.washburn.edu/counseling

Disability Services:

The Student Services Office is responsible for assisting in arranging accommodations and for identifying resources on campus for persons with disabilities. Qualified students with disabilities must register with the office to be eligible for services. The office MUST have appropriate documentation on file in order to provide services. Accommodations may include in-class note takers, test readers and/or scribes, adaptive computer technology, brailled materials. Requests for accommodations should be submitted at least two months before services should begin; however, if you need an accommodation this semester, please contact the Student Services Office immediately.

Location: Student Services, Mosiman Room in the Memorial Student Union

Web: http://www.washburn.edu/student-services; Phone: 785-670-1629; E-Mail:

Students may voluntarily identify themselves to the instructor for a referral to the Student Services Office.

Academic Misconduct Policy:

All students are expected to conduct themselves appropriately and ethically in their academic work. Inappropriate and unethical behavior includes (but is not limited to) giving or receiving unauthorized aid on examinations or in the preparation of papers or other assignments, or knowingly misrepresenting the source of academic work. Washburn University’s Academic Impropriety Policy describes academically unethical behavior in greater detail and explains the actions that may be taken when such behavior occurs. For guidelines regarding protection of copyright, consult http://www.washburn.edu/copyright. For a complete copy of the Academic Impropriety Policy, contact the office of the Vice President for Academic Affairs, Bradbury Thompson Alumni Center Suite 200, or go on-line to:

http://www.washburn.edu/academic-impropriety.

Center for Undergraduate Studies and Programs (CUSP):

As a Washburn student, you may experience difficulty with issues such as studying, personal problems, time management, or choice of major, classes, or employment. The Center for Undergraduate Studies and Programs (Office of Academic Advising, Educational Opportunity Program, and Office of Career Counseling, Testing and Assessment) is available to help students either directly through academic advising, mentoring, career counseling, testing and developing learning strategies or by identifying the appropriate University resource. If you feel you need someone with whom to discuss an issue confidentially and free of charge, contact CUSP in Morgan 122, 785-670-2299, .

Proposed course outline (tentative and subject to change):

Week of class / Topics covered / Readings in the Harrington volume
1 / Syllabus. Basic concepts of game theory.
Games in normal (strategic) and extensive form. / Ch.1 & 2
2 / Dominant and dominated strategies.
Nash equilibrium in a two-person game.
Application: Prisoners’ dilemma / Ch.3 & 4
3 / Zero-sum and variable-sum games.
N-player games. Coordination games. / Ch.4 & 5
4 / Mixed strategies and mixed strategy equilibria.
Web application: Tragedy of the Commons / Ch.7
5 /

Dynamic games. Subgame perfection in sequential games.

Application: The Centipede game. / Ch.8
6 / Midterm 1. Repeated games. Trigger strategies. / Ch.13 & 14
7-8 / Games with continuous strategies.
Application: The Cournot game vs. the Stackelberg game. / Ch.6
9 / Uncertainty in games. / Ch.9
10 / Games of incomplete information.
Bayesian updating of beliefs. / Ch.10
11 /

Midterm 2.

Auctions.

/ Ch.10
12 / Web application: Common-value auction
Signaling in games of incomplete information. / Ch.11
13 / Elements of cooperative game theory / Add’l readings
14-15 / Presentations

More specific reading assignments will be posted on the class Web page during the semester.

4

[*]* Necessary conditions for successful experience in this course include solid prior knowledge of basic algebra, probability theory, and optimization techniques. Junior standing is preferred. No specific business or economics knowledge is required.