MGT-300 / 2 credits

Teacher: Perazzi Elena

Language: English

Remark: Une seule inscription à un cours SHS+MGT autorisée. En cas d'inscriptions multiples elles seront toutes supprimées sans notification

## Summary

Game theory studies the strategic interactions between rational agents. It has a myriad of applications in politics, business, sports. A special branch of Game Theory, Auction Theory, has recently guided the development of Ebay, Google advertising auctions, and of the Wireless spectrum auctions.

## Content

The course will be organized around three big  themes:

• Introduction to the main solution concepts in Game Theory: dominance, iterated deletion of dominated strategies, Nash equilibrium, backward induction, subgame perfect equilibrium. Special emphasis will be given to real-life examples, such as: how to shoot penalties; why companies cluster in some locations; the Cuban missile crisis.
• Auction theory: How to optimally bid in an auction? How to optimally design an auction? We will cover first and second-price auctions; the revelation principle;  common-value auctions with imperfect information (the winner’s curse). Applications to Ebay auctions, Google advertising  auctions and the Wireless spectrum auctions.
• Evolutionary game theory: an application of game theory to biology. It explores (through an extensive use of simulation tools)  how cooperative behavior emerged from Darwinian competition through repeated interactions.

## Keywords

Games, Auctions, Nash equilibrium, cooperation

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## Learning Outcomes

By the end of the course, the student must be able to:

• Compute the Nash equilibria of simple games in normal form
• Compute the Nash equilibria of simple games in extensive form and be able to determine which of these equilibria are subgame perfect
• Compute mixed-strategy equilibria of simple games.
• Analyze first and second-price auctions.
• Model how a cooperative equilibrium can be sustained with infinitely-repeated games.
• Compute the fixed point of optimal best responses.
• Model real-life situations as games and find the equilibria.
• Solve dynamic games through backward induction.

## Transversal skills

• Plan and carry out activities in a way which makes optimal use of available time and other resources.
• Use a work methodology appropriate to the task.
• Continue to work through difficulties or initial failure to find optimal solutions.

## Teaching methods

Lectures; homeworks; case studies.

## Expected student activities

Attend lectures;Complete homeworks in groups; Participate in class

## Assessment methods

Assignments, completed in groups during the semester. Assignments may be qualitative, quantitative, or real-word case studies (100%)

## Supervision

 Office hours Yes Assistants Yes Forum Yes

No

## Notes/Handbook

Lecture notes will be provided for each lecture.

## In the programs

• Semester: Fall
• Number of places: 120
• Exam form: During the semester (winter session)
• Subject examined: Game theory and strategic decisions
• Lecture: 2 Hour(s) per week x 14 weeks
• Type: mandatory

## Reference week

Tuesday, 13h - 15h: Lecture MAB111

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