Games and Decisions (Inactive course)

Instructors: Dino Gerardi and Paolo Ghirardato

NEWS:

This course is not active any more, and it shall therefore have only three exam sessions (appelli) per year.
PAOLO GHIRARDATO'S OFFICE HOURS:
Prof. Ghirardato is available to meet students (in his office in the Dipartimento) by appointment only. Send him an email by clicking here.
DINO GERARDI'S OFFICE HOURS: Prof. Gerardi is available to meet students (in his office in the Dipartimento) by appointment only. Send him an email by clicking here.

SYLLABUS: This is a course --elective for the Master's degrees (LM) in Economics, in Quantitative Finance and Insurance, and in Matematica (Indirizzo modellistico-probabilistico)-- which introduces students to the formalization and analysis of decision making in a single-person and in a strategic (i.e., game theory) environment. While the course's emphasis is on theoretical issues, some attention is also given to the application of concepts to business, economic and financial problems.

The course is divided into two parts:

Part 1: Decisions (Ghirardato)

Introduction and overview of decision models
Known probabilities: The Expected Utility Model
Subjective probability: The Subjective Expected Utility model (Anscombe-Aumann and Savage)
Non-expected utility models: The Allais and Ellsberg paradoxes and their rationalizations

Part 2: Games (Gerardi)

A decision-theoretic approach: Dominance, beliefs and "Never Weak Best Response" strategies
Strategic form games: Dominance, Nash equilibrium, mixed strategies
Extensive Form Games: Corresponding strategic forms, behavioral strategies, backwards induction, subgame perfect equilibrium
Games of Incomplete Information: Normal-form representation of static games of incomplete information, Bayesian Nash equilibrium, perfect Bayesian equilibrium
Repeated Games: Folk theorems

The exam is mostly going to be based on the class notes and some readings assigned in class. However, for supplemental reading (and some homework exercises) the following are the suggested textbooks for the course:

David Kreps, Notes on the Theory of Choice, Westwood Press, 1988 (hard, but good as reference)
Martin J. Osborne, An Introduction to Game Theory, Oxford University Press, 2003 (easier)
Martin J. Osborne and Ariel Rubinstein, A Course in Game Theory, The MIT Press, 1994 (harder, but available electronically here)

EXERCISES: The following exercises are very important as practice and verification of your understanding of the course material.

Part I (Decisions):

PAST EXAMS: These are the first official exams for this course.

CONTACTS
paolo.ghirardato at unito.it
dino.gerardi at carloalberto.org

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Created: 08/10/10. Last revised: 29/09/16