STAT 473 Game Theory
Spring 2000
Professor: T.E.S. Raghavan
Office: 517 SEO
Office Hours: 2:00-3:00 p.m. MWF
e-mail:
ter@uic.eduweb address:
www.uic.edu/~ter
Purpose of Course:
The course is an introduction to game theory with applications to Economics, Political Science, Military Science, Marketing strategies, Legal battles, Auctions, Real Estate competition, Animal combats and much more.
Texts:
1. The Complete Strategist - J. D. Williams - Dover Publications-paperback- You should be able to read it with no help and homework exercises will appear from the examples of this book
2. Game Theory - P. Straffin- The Mathematical Association of America: The topics and materials in this book will be used for lectures and also for homework assignments besides other assignments.
3. Game Theory and Applications- Graham Romp-Oxford University Press.- Students with a background in Economics and Business will find this text book more to their spirit.
4. Game and Decisions-Luce and Raiffa-(Reference)
This classic book will be used for cooperative game theory and for Nash bargaining theory and especially for the topic of social choice.
We will use books 3 and 4 generally for applications to economics.
NOTE: Students are advised to buy the books by Straffin (for general math students and OR students). The book by Luce and Raiffa is useful for general social scientists in the areas of psychology, politics, law, criminal justice and so on. The books by Gibbons and Romp are specially meant for students in the areas of economics, business and public policy
.
Grading Policy:
Let X be the average grade of all exams including finals. Let Y be the grade for the final exam. Let Z be the larger of X and Y. In grading, Z will be given 80% weight. The other 20% weight will be given for home works. Essentially the homework will help to deliberate on intermediate grades like A- or C+ etc.
Syllabus:
Zero-sum two person games: Examples from games of perfect information. How to solve for values by backward induction. Equilibria for games. Subgame perfect equilibria. Dominance and saddle points. Mixed strategies for zero sum matrix games. Minimax theorem. Solving 2 times 2 games. How to solve them by common sense. Graphical solutions for 2 times n games.
Solution for general case by the Lindo software.
Applications to anthropology, philosophy, guerilla warfare, and duopoly.
Two person non-zero sum games/:Game tree and equilibrium in pure strategies for games with perfect information. Chain store paradox and the need to refine equilibria and subgame perfect equilibria. other refinements. Correlated equilibria. Evalutionarily stable strategies.
Nash arbitration for two person bargaining: Axiomatic approach. Applications to labor-management arbitration. General Duopoly problem.
Non-cooperative N person games/: Examples from strategic voting, football draft. Dominance solvability and rationalizability. Applications to auctions and bidding.
Cooperative games: Games in characteristic function form. Assignment games, Ricardean economies, A legal problem discussed in the Talmud and its solution via the nucleolus.
Note: as the semester goes, readings will be assigned according to the appropriate syllabus item.