851-0588-00L  Introduction to Game Theory

Semester Spring Semester 2017
Lecturers H. Nax, B. Pradelski
Periodicity yearly course
Language of instruction English
Comment Particularly suitable for students of D-MAVT, D-MATL

Abstract This course introduces the foundations of game theory. It treats models of social interaction, conflict and cooperation, the origin of cooperation, and concepts of strategic decision making behavior. Examples, applications, and the contrast between theory and empirical results are particularly emphasized.
Objective Learn the fundamentals, models, and logic of thinking about game theory.
Apply game theory models to strategic interaction situations and critically assess game theory's capabilities through a wide array of experimental results.
Content Game theory provides a unified language to study interactions amongst different types of individuals (e.g. humans, firms, nations, animals, etc.). It is often used to analyze situations involving conflict and/or cooperation. The course introduces the basic concepts of both non-cooperative and cooperative game theory (players, strategies, coalitions, rules of games, utilities, etc.) and explains the most prominent game-theoretic solution concepts (Nash equilibrium, sub-game perfection, Core, Shapley Value, etc.). We will also discuss standard extensions (repeated games, incomplete information, evolutionary game theory, signal games, etc.).

In each part of the course, we focus on examples and on selected applications of the theory in different areas. These include analyses of cooperation, social interaction, of institutions and norms, social dilemmas and reciprocity as well as applications on strategic behavior in politics and between countries and companies, the impact of reciprocity, in the labor market, and some applications from biology. Game theory is also applied to control-theoretic problems of transport planning and computer science.

As we present theory and applications, we will also discuss how experimental and other empirical studies have shown that human behavior in the real world often does not meet the strict requirements of rationality from "standard theory", leading us to models of "behavioural" and "experimental" game theory.

By the end of the course, students should be able to apply game-theoretic in diverse areas of analysis including > controlling turbines in a wind park, > nations negotiating international agreements, > firms competing in markets, > humans sharing a common resource, etc.
Lecture notes See literature below. In addition we will provide additional literature readings and publish the lecture slides directly after each lecture.
Literature K Binmore, Fun and games, a text on game theory, 1994, Great Source Education

SR Chakravarty, M Mitra and P Sarkar, A Course on Cooperative Game Theory, 2015, Cambridge University Press

A Diekmann, Spieltheorie: Einführung, Beispiele, Experimente, 2009, Rowolth

MJ Osborne, An Introduction to Game Theory, 2004, Oxford University Press New York

J Nash, Non-Cooperative Games, 1951, Annals of Mathematics

JW Weibull, Evolutionary game theory, 1997, MIT Press

HP Young, Strategic Learning and Its Limits, 2004, Oxford University Press