This course provides students with analytical tools for an advanced understanding of strategic interaction. We apply these tools to study the interaction of individuals in various political, legal and economic institutions.
Game theory is a tool to predict the behavior of individuals in situations with strategic interaction. The first part of the course introduces fundamental concepts of game theory (game, strategy, equilibrium, private information, and mechanism design), applies them to important prototype-games, and confronts them with the empirical evidence on strategic human behavior.
The second part of the course deals with issues in institutional design. Any political, legal, economic or social institution imposes a game upon the participating individuals. A key issue is that institutions have to handle asymmetric information. Game theory and experimental economics help to predict outcomes for any such institution. Applications in the following areas will be discussed: competition, war, bargaining, football, banking, auctions, public procurement, corporate finance, voting, policy reform, law, and the regulation of the financial industry.
This course is for 2nd year MIA and MPP students only.
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