ECON 1177 Game Theory & Behavioral Econonics

Abstract

Course Description This course introduces basic techniques of game theory and provides a wide range of economic and other social-scientific applications. Game theory—developed by economists, mathematicians, behavioral scientists, and other social, or mathematical scientists—is a mathematical tool to analyze interactions of economic agents with strategic motives. In other words, game theory involves decision problems involving multiple decision makers whose objectives may contradict each other. The abstract theory embraces various applications in economic, political, and even psychological decision makings. Due to its high generality and versatility, game theory and its applications now constitute a large part of the modern economic theory. In this course, students will understand the basic notions of game theory through learning economic and psychological applications such as commitment, “too big to fail,” piece-rate compensation, price discrimination, altruistic preference, time inconsistency, oligopoly, bargaining, long-term relationships, and signaling. ____ While the theory provides powerful implications on various problems, the usefulness of game theory is built upon strong assumptions that are sometimes questionable. Game-theoretic experiments have found several anomalies that deviate from theoretical predictions. Such anomalies are well-documented in the fields of behavioral and experimental economics, which is another major topic covered in this course. This course aims to train students to enable them to comfortably (and probably implicitly) apply game-theoretic ideas to various real-world problems. This course involves extensive problem-solving and discussion activities, as well as the term-paper research project. Students learn the concepts of game theory by mathematically solving game-theoretic problems and get familiarized with game-theoretic methods through discussions. As the capstone of the coursework, students finish their research projects and present their outcomes in front of their classmates at the end of this course.