Advanced Microeconomics 2: Game Theory by Willem Spanjers Description Game theory describes and analyzes the interaction of rational decision makers, i.e. of decision makers who pursue their goals given their beliefs and the constraints they face. The way the decisions of the players are interconnected, the anticipated behaviour of the other players and the player’s own behaviour are in the focus of the analysis. They are determined by the equilibrium concept that is used. Not only does game theory provide a framework to understand everyday interaction in a variety of contexts. It also provides the basis for most economic theories, which at their core are about interacting decision makers. Finally, game theory can be a useful tool in the analysis and design of frameworks for economic interaction, ranging from specific contractual frameworks to institutions. Outline 1) Basics a) The Rules of the Game b) Finite Strategy Games c) Continuous Strategy Games d) Mixed Strategies 2) Dynamic Games a) Dynamic Games with Symmetric Information b) Repeated Games and Reputation. c) Dynamic Games with Incomplete Information. 3) Further Topics a) Evolutionary Equilibrium. b) Cooperative Games. c) Ambiguous Games. Core Literature Rasmusen, E. (2007), Games and Information: An Introduction to Game Theory, 4th Edition, Blackwell Publishing, Malden MA. Eichberger, J. (1993), Game Theory for Economists, Oxford University Press, Oxford. Further Reading Cooper, R. (1999), Coordination Games: Complementarities and Macroeconomics, Cambridge University Press, Cambridge. Dow, J. and S. Werlang (1994), “Nash Equilibrium under Ambiguity: Breaking Down Backward Induction”, Journal of Economic Theory, Vol. 64, pp. 305‐324. Eichberger, J. and D. Kelsey (2000), “Non‐Additive Beliefs and Strategic Interaction”, Games and Economic Behavior, Vol. 30, pp. 183‐215. Gintis, H. (2009), The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences, Princeton University Press, Princeton NJ. Marinacci, M. (2000), “Ambiguous Games”, Games and Economic Behavior, Vol. 31, pp. 191‐219. Mas‐Colell, A., M. Whinston and J. Green (1995), Microeconomic Theory, Oxford University Press, Oxford. Weibull, J. (1995), Evolutionary Game Theory, MIT Press, Cambridge MA.