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Game Theory Applications: Lecture Notes Overview

Dive into sequential & simultaneous move games, extensive form, backward induction, pure & mixed strategies, and more in this comprehensive course material. Explore various examples and concepts in game theory to enhance your understanding. Prepared by Galina Albert Schwartz from the Department of Finance at the University of Michigan Business School.

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Game Theory Applications: Lecture Notes Overview

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  1. Game Theory Applications: Lecture Notes Course Website http://www.citi.umich.edu/u/galka/games • Galina Albert Schwartz • Department of Finance • University of Michigan • Business School Lecture Notes in Game Theory

  2. Summary of Lectures 4 & 5 (the beginning) • Sequential & Similtaneous Move Games: Dixit, chapters 3 & 4 • Extensive form games • Backward Induction [rollback methodology] • Pure & mixed strategies • Experiments in Strategy • Second mover advantage, Dixit, p. 57 [brothers or pirates?] Lecture Notes in Game Theory

  3. Extensive Form Games • Gambit on the web http://www.hss.caltech.edu/gambit/Gambit.html • Full information games [complete] • Game Tree = Extensive form game • initial node • decision node • terminal node Lecture Notes in Game Theory

  4. Backward Induction • We assume • Complete information • Pure strategy • Strictly dominated strategies • Weakly dominated strategies • Best Response Action Lecture Notes in Game Theory

  5. The Centipede Game • backward induction • rational or irrational? • What happens if the game is repeated? Lecture Notes in Game Theory

  6. What is fair? • Examples • centipede game • divide a dollar game • `normal’ version & • dictator version • The notion of Social (cultural) norm Lecture Notes in Game Theory

  7. Lewis, Ch 4: their games • Communications • norm • deviance • Gentle & Tough Lecture Notes in Game Theory

  8. More Examples • Free Tea & Coffee for faculty • in Princeton • in UMBS • Why? • Greenspan • precise • wordy • then, why do we care at all? Lecture Notes in Game Theory

  9. To Do: your preparation • To read: • Dixit, chapters 3 & 4 • Lewis, chapter 5 • Next time: More small examples of different types of games • Next time the absolutely necessary component? of the Greenspan’s strategy [and any other Central Banker’s strategy] Lecture Notes in Game Theory

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