Game Theory

Mechanism Design. Revelation principle, Dominance and Nash Implementation. Strategic and Axiomatic Bargaining. Asymmetric Information and Optimal Contracts. Moral Hazard and Adverse Selection models. Signaling and Screening Models. Applications. Static games of complete information: definition of a game; normal form representation; strongly and weakly dominated strategies; Nash Equilibrium (NE); mixed strategy equilibrium. Applications of NE and introduction to market competition; Cournot competition; Bertrand competition; externalities; public goods. Dynamic games of complete information: definition of a dynamic game; extensive form representation; perfect and imperfect information; Backward Induction equilibrium; Subgame Perfect equilibrium. Repeated games: Definition; one-shot deviation property; folk theorem; application to Rubinstein bargaining. Static games of incomplete information: Bayesian games; Bayesian Nash equilibrium. Dynamic games of incomplete information: perfect Bayesian equilibrium; signalling games, cheap talk.
Prerequisites: Optimal Control