Lecture Notes

In the presentations, note that the blank slides indicate separate sections of the lecture. Some material in the lecture notes is courtesy of Vanderbilt University Assistant Professor Mike Shor, and his contributions have been marked on the slides. Other material, such as a few pictures and quotations, could not be posted due to copyright restrictions.

1 Introduction (PDF)

Introduction to the course with examples.
2 Rationality? (PDF)

Irrational play by individuals and groups.

Implications of (ir)rationality on behavior in games, with and without dominant strategies.
3 Equilibrium I (PDF)

Some prototypical games.

Nash equilibrium in simultaneous-move games.

Mixed vs. pure strategies.

Equilibrium arising from evolution.
4 Equilibrium II (PDF)

More on evolution.

Games with sequential moves and subgame-perfect equilibria.
5 Commitment (PDF)

Strategic value of credible commitments.
6 Strategic Substitutes and Strategic Complements (PDF)

Moving first vs. moving last, when to capitalize on the element of surprise, and other applications of the ideas of strategic substitutes and strategic complements.
7 Application: Entering a Market (PDF)

Entry as commitment, and establishing barriers to entry.

Strategic exercise of real options.
8 Application: Brinksmanship (PDF)

Strategic escalation of threats.

Wars of attrition.
9 Auctions (PDF)

Variety of real-world phenomena that can be interpreted as auctions.

Auction theory: Winner's Curse given common values and Revenue Equivalence given independent private values.
10 Uncertainty and Information (PDF)

Strategic manipulation of risk.

Adverse selection and signaling/screening devices.

Agency and moral hazard.
11 Reputation and Strategic Irrationality (PDF)

Making threats and promises credible through reputation in repeated games.

Applications to entry deterrence and cooperation in the Prisoner's Dilemma.