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This is an introductory course in basic game theory. Topics covered include static games of complete information, game theoretic modelling, best-response functions, pure and mixed strategy Nash equilibrium, correlated equilibrium, dynamic games of complete information, backward induction, subgame-perfect equilibrium, repeated games, Bayesian games, auctions, dynamic games of incomplete information, mechanism design.

Learning objectives

At the end of the term, students will be able to:

• Introduce elementary concepts of numerical methods for ODEs and PDEs.
• Develop the practice of error analysis.
• Analyse and solve, numerically, the PDEs that often arise in financial problems using finite difference and Monte-Carlo methods.

Measurable outcomes

• Formalize a real life problem as a game,
• Find equilibria in simple strategic form games
• Compute some refinements of equilibria in extensive form games,
• Compute the price of anarchy in simple games,
• Design and run a simple experiment to test strategic behavior.

Prerequisites

• 10.022 Modelling Uncertainty (or equivalent)

Number of credits: 12