14.12 | Fall 2012 | Undergraduate

Economic Applications of Game Theory


Buy at MIT Press Dutta, Prajit. Strategies and Games: Theory and Practice. MIT Press, 1999. ISBN: 9780262041690. [Preview with Google Books]

Watson, Joel. Strategy: An Introduction to Game Theory. W.W. Norton & Company, 2007. ISBN: 9780393929348.

Kreps, David. A Course in Microeconomic Theory. Princeton University Press, 1990. ISBN: 9780691042640.

Advanced Readings

These two books are very good but harder than the level at which the course is pitched.

Buy at MIT Press Fudenberg, Drew, and Jean Tirole. Game Theory. MIT Press, 1991. ISBN: 9780262061414. [Preview with Google Books]

Buy at MIT Press Osborne, Martin, and Ariel Rubinstein.  A Course in Game Theory. MIT Press, 1994. ISBN: 9780262650403. [Preview with Google Books]

Those who need an easier—and longer—exposition of the topics can read:

Dixit, Avinash, and Susan Sekeath. Games of Strategy. W.W. Norton & Company, 2009. ISBN: 9780393931129.


[Gibbons] = Gibbons, Robert. Game Theory for Applied Economists. Princeton University Press, 1992. ISBN: 9780691003955. [Preview with Google Books]


A More Formal Introduction to Games

  1. Extensive Forms and Normal Forms
  2. Strategies, Dominant Strategies and Iterative Elimination of Strictly Dominated Strategies
  3. Nash Equilibrium
  4. Applications of Nash Equilibrium

Extensive Forms and Normal Forms 
[Gibbons] Chapters 1.1A, and 2.1A.

Strategies, Dominant Strategies and Iterative Elimination of Strictly Dominated Strategies. 
[Gibbons] Chapter 1.1B.

Nash Equilibrium 
[Gibbons] Chapter 1.1C.

Applications of Nash Equilibrium 
[Gibbons] Chapter 1.2.

Backward Induction

  1. Analysis of Extensive-Form Games
  2. Backward Induction
  3. Bargaining and Negotiations
  4. Applications

Analysis of Extensive-Form Games 
[Gibbons] Chapter 2.1A.

Bargaining and Negotiations 
[Gibbons] Chapter 2.1D.

Subgame Perfection [Gibbons] Chapter 2.2.
Repeated Games [Gibbons] Chapter 2.3.
Implicit Cartels [Gibbons] Chapter 2.3.

Incomplete Information

  1. Bayesian Nash Equilibrium
  2. Auctions
  3. Applications

Bayesian Nash Equilibirium 
[Gibbons] Chapter 3.1A, C.

[Gibbons] Chapter 3.2.

Dynamic Games of Incomplete Information

  1. Perfect Bayesian Nash Equilibrium
  2. Signaling
  3. Sequential Bargaining Under Asymmetric Information
  4. Reputation Forrmation

Perfect Bayesian Nash Equilibrium 
[Gibbons] Chapter 4.1

[Gibbons] Chapter 4.2A, and 4.4.

Sequential Bargaining Under Asymmetric Information 
[Gibbons] Chapter 4.3B.

Course Info

As Taught In
Fall 2012
Learning Resource Types
Problem Sets with Solutions
Exams with Solutions
Lecture Notes