Course Objective:
Game theory is a formal study of conflicts and cooperation. The game theoretic concepts apply whenever the actions of several agents (individuals, groups, firms etc. or any combination of these) are interdependent. The concept of Game theory provides a language to formulate structure, analyze, and understand the strategic scenario. This course would provide the students the main ideas of how the game theories can help to understand the economic and social phenomena. It emphasizes the idea behind the theories rather than their mathematical expression typically taught in mathematics. The course would introduce some equilibrium concepts of game theory and their usage in economics along with various numerical examples and applications. The basic knowledge of game theory can dramatically improve the strategic instinct and the decision making skill of students.
Course Outcomes: The students will be able to
1 Understand the economic and social phenomena easily
2 Understand the actions of several economic agents (individuals, groups, firms etc. or any combination of these) in any market structure
3 Improve their strategic instinct and the decision making skill
4 Elucidate the concept of equilibrium in any branch economics
5 Understand, clearly, the concept of Nash Equilibrium, different market strategies and zero-sum game
Course Content:
UNIT I Introduction to Game Theory; History of Game Theoretic Analysis; classifications of games; theory of rational choice 10 hrs
UNIT II Strategic Game: The Pay-off matrix; the Prisoner’s dilemma. 10 hrs
UNIT III Nash Equilibrium: The concept of Nash Equilibrium; dominating and dominated strategies; zero-sum game 10 hrs
UNIT IV Mixed Strategy Nash Equilibrium: concepts and examples; strategic game with randomization. Games with perfect information. 10 hrs
UNIT V Games with imperfect information; Bayesian Games; Cournot’s duopoly game with imperfect information; auction; other applications. 10 hrs
UNIT VI Repeated and Cooperative Games 10 hrs
Internal Assessment:
CIA 1 Unit I, Unit II
CIA 2 Assignment submission and/or presentation
Text Books:
1. Osborne J Martin (2004), An Introduction to Game Theory, Oxford University Press
Reference Books:
1. Fudenberg, D. and Tirole, J. (1991), Game Theory, MIT Press
2. Gibbons, R. (1992), A Primer in Game Theory, Prentice-Hall
3. Myerson, R. (1991): Game Theory: Analysis of Conflict, Harvard University Press
- Teacher: Department of Economics