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Game Theory Applications: Lecture Notes

Game Theory Applications: Lecture Notes. Course Website http://www.citi.umich.edu/u/galka/games Galina Albert Schwartz Department of Finance University of Michigan Business School. Summary of Lectures 4 & 5 (the beginning). Sequential & Similtaneous Move Games: Dixit, chapters 3 & 4

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Game Theory Applications: Lecture Notes

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  1. Game Theory Applications: Lecture Notes Course Website http://www.citi.umich.edu/u/galka/games • Galina Albert Schwartz • Department of Finance • University of Michigan • Business School Lecture Notes in Game Theory

  2. Summary of Lectures 4 & 5 (the beginning) • Sequential & Similtaneous Move Games: Dixit, chapters 3 & 4 • Extensive form games • Backward Induction [rollback methodology] • Pure & mixed strategies • Experiments in Strategy • Second mover advantage, Dixit, p. 57 [brothers or pirates?] Lecture Notes in Game Theory

  3. Extensive Form Games • Gambit on the web http://www.hss.caltech.edu/gambit/Gambit.html • Full information games [complete] • Game Tree = Extensive form game • initial node • decision node • terminal node Lecture Notes in Game Theory

  4. Backward Induction • We assume • Complete information • Pure strategy • Strictly dominated strategies • Weakly dominated strategies • Best Response Action Lecture Notes in Game Theory

  5. The Centipede Game • backward induction • rational or irrational? • What happens if the game is repeated? Lecture Notes in Game Theory

  6. What is fair? • Examples • centipede game • divide a dollar game • `normal’ version & • dictator version • The notion of Social (cultural) norm Lecture Notes in Game Theory

  7. Lewis, Ch 4: their games • Communications • norm • deviance • Gentle & Tough Lecture Notes in Game Theory

  8. More Examples • Free Tea & Coffee for faculty • in Princeton • in UMBS • Why? • Greenspan • precise • wordy • then, why do we care at all? Lecture Notes in Game Theory

  9. To Do: your preparation • To read: • Dixit, chapters 3 & 4 • Lewis, chapter 5 • Next time: More small examples of different types of games • Next time the absolutely necessary component? of the Greenspan’s strategy [and any other Central Banker’s strategy] Lecture Notes in Game Theory

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