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    Api 303

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    This document provides the syllabus for the course API 303 Game Theory and Strategic Decisions to be taught in Spring 2012. It outlines the course description, schedule, assignments, grading, textbooks and readings. The course will use game theory to study strategic behavior and interdependent decision making. It will meet weekly for lectures and sections. Grades will be based on problem sets, a group assignment, and a final exam. The syllabus provides the detailed schedule, assignments due dates, and required and recommended readings for each class.

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    Api 303

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    007wasr
    351 views7 pages
    This document provides the syllabus for the course API 303 Game Theory and Strategic Decisions to be taught in Spring 2012. It outlines the course description, schedule, assignments, grading, textbooks and readings. The course will use game theory to study strategic behavior and interdependent decision making. It will meet weekly for lectures and sections. Grades will be based on problem sets, a group assignment, and a final exam. The syllabus provides the detailed schedule, assignments due dates, and required and recommended readings for each class.

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    This document provides the syllabus for the course API 303 Game Theory and Strategic Decisions to be taught in Spring 2012. It outlines the course description, schedule, assignments, grading, textbooks and readings. The course will use game theory to study strategic behavior and interdependent decision making. It will meet weekly for lectures and sections. Grades will be based on problem sets, a group assignment, and a final exam. The syllabus provides the detailed schedule, assignments due dates, and required and recommended readings for each class.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    351 views7 pages

    Api 303

    Uploaded by

    007wasr
    This document provides the syllabus for the course API 303 Game Theory and Strategic Decisions to be taught in Spring 2012. It outlines the course description, schedule, assignments, grading, textbooks and readings. The course will use game theory to study strategic behavior and interdependent decision making. It will meet weekly for lectures and sections. Grades will be based on problem sets, a group assignment, and a final exam. The syllabus provides the detailed schedule, assignments due dates, and required and recommended readings for each class.

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    of 7

    API 303 Game Theory and Strategic Decisions

    Course Syllabus Spring 2012


    Faculty Pnar Dog an [email protected] O!ce: L-215 Phone: 617 496 6757 Teaching Fellow Alexandra Van Geen [email protected] Faculty Assistant Katie Naeve [email protected] O!ce: L-349 Phone: 617 495 8833 Course Assistant Katie Frost [email protected]

    Weekly Schedule Lecture 10:10 - 11:30 a.m. 10:10 - 11:30 a.m. Review Section Land Land 10:10 - 11:30 a.m. Land O!ce Hours* tba

    Tuesday Thursday Friday

    *Please sign up on the sheet outside my o!ce door. If you are unable to attend my o!ce hours or they are full, please contact me for a dierent time. Course Description This course uses game theory to study incentives and strategic behavior in practical situations of inter-dependent decision making and negotiations. The course will develop basic theoretical concepts in tandem with applications from a variety of areas, including bargaining, competition, and strategic voting. Prerequisites No formal prerequisites. The course is designed to be accessible to all Kennedy School students, regardless of mathematical background. The lectures emphasize conceptual rather than technical material, however, additional technical material will be provided as optional readings. Grading Grades for the course will be assigned based on Problem sets 20% Group assignment 30% Final exam (in class) 50% Main Textbook Avinash Dixit, Susan Skeath, and David H. Reiley, Jr., Games of Strategy, 3rd Edition, Norton, 2009. 1

    Recommended Books We will read from three other books, which you might consider purchasing. They are also available on reserve in the HKS Library. Avinash K. Dixit and Barry J. Nalebu, The Art of Strategy, Norton, 2008. David Kreps, Game Theory and Economic Modeling, Oxford/Clarendon, 1990. Thomas Schelling, Micromotives and Macrobehavior, Norton, 1978 (Rev Ed 2006). Other Books Roy Gardner, Games for Business and Economics, Wiley, 1995. John McMillan, Games, Strategies, and Managers, Oxford University Press, 1996. Howard Raia, The Art and Science of Negotiation, Harvard University Press, 1982. Thomas Schelling, The Strategy of Conict, Harvard University Press, 1960 (Reprinted1980). Readings Textbook readings are marked with a [T]. These readings are optional, but recommended if you are nding the conceptual or theoretical material for a given class especially challenging. Required readings are marked as [R]. Remaining readings are recommended. Supplemental readings will almost always be available online for free through the Harvard library system or in books reserved in the library. One way to reach articles published in both academic journals and newspapers is through the Harvard Library/Google Scholar interface. Use the following link to access the system: http://scholar. google.com.ezp1.harvard.edu/ You will be prompted to enter your Harvard ID and library PIN. Search for the article using keywords, and use the Find It@Harvard link to access the electronic version of the paper. Group Assignment The group assignment will require you to apply game theoretical concepts to an area of your special interest, e.g. business, politics, or society, and write a 2-3 page essay. You will also be asked to make a short presentation of the issue you chose and of your analysis during class. The group assignment will count for 30% of the grade. Each group member will anonymously rate the contribution of his/her group members for the assignment, which will be used as an input for each students grading. Attendance is required for all students during the week of student presentations (Tuesday, April 17 and Thursday, April 29). Problem Sets There will be eight short problem sets, which will be graded. Problem sets count as 20% of the grade (2.5% each). Small groups of studentsno more than fourare encouraged to work together on the problem sets. Problem solutions must be written independently by each of the students in the small group, and must indicate the name of the students in the group. All problem sets are due at class time. Answers to the problem sets will be posted on the class web site shortly after they are turned in. Problem sets turned in after the class time on the due date will not receive any credit.

    Important dates : Shopping Day First class Group assignment essays due Presentation of group assignments Last class Final exam (in class, 9:00-noon) Problem set due dates : Problem Problem Problem Problem Problem Problem Problem Problem set set set set set set set set 1 2 3 4 5 6 7 8 Tuesday, January 31 Tuesday, February 7 Tuesday, February 14 Tuesday, February 21 Tuesday, February 28 Tuesday, March 6 Tuesday, March20 Tuesday, April 3 Thursday, January 19 Tuesday, January 24 Tuesday, April 10 Tuesday, April 17 and Thursday, April 19 Thursday, April 26 Thursday, May 3

    Detailed Schedule and Readings (Tentative)


    DSR: Dixit, Skeath and Reiley (2009)

    Tuesday, January 24: Introduction and Foundations of Game Theory


    [T] DSR, Chapters 1 and 2. [T] Kreps, Chapters 1 and 2 in Game Theory and Economic Modeling. [R] Schelling, "What is Game Theory?" Chapter 10 in Choice and Consequence, Harvard University Press (Reprinted 2007), pp. 213-242. (Over the next two classes.) [R] War games. Economist, 15 October 2005, p. 82.

    Thursday, January 26: Prisoners Dilemma and its Applications


    [T] DSR, Chapter 4, Section 4.3. [T] Kreps, Chapter 3 in Game Theory and Economic Modeling. [R] Schelling, Hockey Helmets, Daylight Saving, and Other Binary Choices, Chapter 7 in Micromotives and Macrobehavior, pp. 213-243. [R] The Malls Get Decked: Retailers Minding Too Many Stores, The Street.com, November 22, 2000. Why Were So Nice: Were Wired to Cooperate. The New York Times, July 23, 2002. 3

    Tuesday, January 31: Pure Strategy Nash Equilibrium


    [T] DSR, Chapter 4, Sections 4.1, 4.2, 4.4, 4.6, and 4.8 (additional reading: Chapter 5, Sections 5.1 and 5.2).

    Thursday, February 2: Multiple Nash Equilibria and Equilibrium Selection


    [T] DSR, Chapter 4, Section 4.7 Amazon and the state of Illinois play a game of chicken over online tax collection, mindyourdecisions.com. Lau and Leong, "ATM Banking + Game Theory = Prots," A.T. Kearney Report.

    Tuesday, February 7 and Thursday, February 9: Mixed Strategies


    [T] DSR, Chapter 7 (Section 7.5 optional). [R] Game Theory for Swingers: What states should the candidates visit before Election Day? Slate, October 25, 2004. [R] Rock, Paper, Payo: Childs Play Wins Auction House an Art Sale. The New York Times, April 29, 2005. [R] The Art of the Save, for Goalie and Investor.The New York Times, March 1, 2008. World Cup Game Theory. Slate, June 24, 2006. Gardner, "Mixed Strategies and Blu!ng: Liars Poker," Section 4.3 in Games for Business and Economics, pp. 83-86.

    Tuesday, February 14: Repeated Games


    [T] DSR, Chapter 11 (Sections 11.1-11.3 only). Axelrod, The Evolution of Cooperation, Perseus Books (Rev Ed 2006), Chapters 1-4, pp. 3-87.

    Thursday, February 16: Collection Action and Collective Inaction Games


    [T] DSR, Chapter 12. [R] Elster, "Social Norms and Economic Theory." Journal of Economic Perspectives, 1989, Vol. (3)4, pp. 99-117. [R] Burger, Tragedy of the Commons: 30 Years Later. Environment, 1998, Vol. 40(10), pp. 4-13. Hardin, Extensions of The Tragedy of the Commons." Science, 1998, Vol. 280, pp. 682-683. 4

    Tuesday, February 21: Special Lecture on Elinor Ostroms contributions to Collective (In)Action Problems
    [R] Ostrom, "Collective Action and the Evolution of Social Norms. Journal of Economic Perspectives, 2000, Vol. 14(3), pp.137-158. [R] Ostrom, "A Behavioral Approach to the Rational Choice Theory of Collective Action: Presidential Address, American Political Science Association, 1997." The American Political Science Review, 1998, Vol. 92(1) (Mar., 1998), pp. 1-22. [R] Christensen, "Thought Leader Inteview: Elinor Ostrom."Rotman Magazine, Fall 2010.

    Thursday, February 23: Sequential-Move Games


    [T] DSR, Chapter 3.

    Tuesday, February 28: Simultaneous and Sequential-Moves Combined: Subgame Perfect Nash Equilibrium (SPNE)
    [T] DSR, Chapter 6.

    Thursday, March 1: Subgame Perfection and Strategic Moves


    [T] DSR, Chapter 10. [R] Dixit, Thomas Schellings Contributions to Game Theory. Scandinavian Journal of Economics, 2006, Vol. 108(2), pp. 213-229. [R] When It Can Be Good to Burn Your Boats. Financial Times, October 25, 1999.

    Tuesday, March 6: Application of SPNE to Bargaining


    [T] DSR, Chapter 18, Sections 18.3-18.5. [R] Schelling, "An Essay on Bargaining," Chapter 2 in The Strategy of Conict, pp. 21-46. [R] Two Developing Nations Agree to Reduce Greenhouse Emissions. Wall Street Journal, November 12, 1998. Roth et al, Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo. American Economic Review, 1991,Vol. 81(5), pp. 1068-1095.

    Thursday, March 8: Introduction to Games with Incomplete Information


    [T] DSR, Chapter 9, Section 9.2.

    [R] Schelling, "Thermostats, Lemons, and Other Families of Models," Chapter 3 in Micromotives and Macrobehavior, pp. 83-133. Logren, Persson and Weibull. "Markets with Asymmetric Information: The Contributions of George Akerlof, Michael Spence and Joseph Stiglitz." Scandinavian Journal of Economics, 2002, Vol. 104(2), pp. 195-211.

    Tuesday, March 13, Thursday, March 15: Spring Break (no classes) Tuesday, March 20: Moral Hazard and Adverse Selection
    [T] DSR, Chapter 9, Section 9.4.A. [R] McMillan, "Creating Incentives" and "Designing Contracts," Chapters 8 and 9 in Games, Strategies, and Managers. [R] Gneezy, Meier, and Rey-Biel. "When and Why Incentives (Dont) Work to Modify Behavior." Journal of Economic Perspectives, 2011, Vol. 25(4), pp. 191210. [R] The moral-hazard myth. The New Yorker, August 29, 2005. [R] Writing o tyrants debt is a principle that should be extended to even poorer nations. The Guardian, April 21, 2003.

    Thursday, March 22 and Tuesday, March 27: Signaling games


    [T] DSR, Chapter 9, Sections 9.4.B, 9.5, and 9.6. Dixit and Nalebu, Chapter 8 in The Art of Strategy.

    Thursday, March 29: Cheap Talk


    [T] DSR, Section 9.3. [R] Farrell and Rabin, Cheap Talk. Journal of Economic Perspectives, 1996, Vol. 10(3), pp. 103-118.

    Tuesday, April 3 and Thursday, April 5: Auctions


    [T] DSR, Chapter 17. [R] Migrom, Auctions and Bidding: A Primer. Journal of Economic Perspectives, 1989, Vol. 3(3), pp. 3-22. [R] McMillan, "Bidding in Competition" and "Bidding in Olympic Competition," Chapters 11 and 12 in Games, Strategies, and Managers, pp. 133-159. [R] Economic focus: Bidding adieu? The Economist. June 29, 2002. Lucking-Reiley, "Auctions on the Internet: Whats Being Auctioned, and How?" Journal of Industrial Economics, 2000, Vol. 48(3), pp. 227-252. 6

    McMillan, "Selling Spectrum Rights." Journal of Economic Perspectives, 1994, Vol. 8(3), pp. 145-62. Thaler, "The Winners Curse," Chapter 5 in The Winners Curse, Princeton University Press 1994, pp. 50-62. The Agony of Victory: Online Auctions and the Winners Curse, Slate, March 19 1999.

    Tuesday, April 10 and Thursday, April 12: Strategy and Voting


    [T] DSR, Chapter 16. Shepsle and Bonchek, "Strategic Behavior" and "Voting Methods and Electoral Systems," Chapters 6 and 7 in Analyzing Politics, Norton 1997, pp.137-191.

    Tuesday, April 17 and Thursday, April 19: Presentation of group projects Tuesday, April 24: Power and limits to game theory Thursday, April 26: Summing up Thursday, May 3 (9:00 am): Final Exam

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