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Regular version of the site
Master 2021/2022

Microeconomics: Applications

Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'
Category 'Best Course for New Knowledge and Skills'
Type: Elective course (Economics and Economic Policy)
Area of studies: Economics
When: 1 year, 3, 4 module
Mode of studies: offline
Open to: students of all HSE University campuses
Master’s programme: Economics and Economic policy
Language: English
ECTS credits: 6

Course Syllabus

Abstract

This course has two parts. The first part is devoted to the advanced topics in Game Theory and its applications. The issues in non-cooperative theory cover some modern approaches to dynamic games, including games with incomplete information, and its essential applications, such as the model of job market signaling. The special attention will be paid to cooperative game theory, basic solution concepts, bargaining solution and the connection and open problems between cooperative and non-cooperative modeling. The course will include discussions on evolutionary games, bounded rationality behavior, hierarchical games, and some other related topics. The second part of the course introduces Contract Theory, Matching Theory, and Social Choice. The theory of contracts studies situations when a principal (e.g. manager) offers a contract to an agent (e.g. worker). The agent either has some private knowledge relevant for the principal (screening model) or can take a hidden action (moral hazard model). The theory of matching seeks to design mechanisms to match one side of a market (e.g. men) to the other side of the market (e.g. women). The social choice theory that studies preference aggregation rules and their normative appeal. In the 4th module of 2019/2020 academic year all classes will be switched to online format via ZOOM.
Learning Objectives

Learning Objectives

  • The course is designed to equip students with both the foundations and the modern game-theoretical tools for economic modeling. A special attention will be paid to popular solution concepts, relation between a cooperative and non-cooperative approaches and modern trends in game-theoretical applications.
  • After successful passing the course, a student will: • know mathematical models and concepts of game theory; • be able to construct adequate model for economic interactive situation and analyze it; • understand the area and limitations of game-theoretical method.
Expected Learning Outcomes

Expected Learning Outcomes

  • A atudent should learn about this class of games and understand their specific properties and differences from repeated games.
  • A studen should learn the concepts of a dynamic game, information set, beliefs, weak and strong sequential equilibria.
  • A student should be able to apply DA algorithm.
  • A student should be able to discuss advantageous and disadvantageous of various voting rules
  • A student should be able to formulate Arrow theorem.
  • A student should be able to recognize adverse selection mechanism in real life
  • A student should be able to recognize moral hazard phenomenon in real life
  • A student should be able to solve a simple model of moral hazard.
  • A student should formulate and solve simple bargaining two-person problems.
  • A student should formulate and solve simple models based on screening motives
  • A student should formulate and solve the simplest cooperative games, should learn the main solution concepts and their differences.
  • A student should formulate anf find a solution in the simplest evolutionary games.
  • A student should know the alternatives to Nash equilibrium, the results for some classic experiments and should apply the logic to simplest games.
  • A student should know the limitations of the modern game theoretical approach and the main critique of it.
  • A student should learn and solve the simplest games concerning the following topics. Static games of complete information. Nash equilibrium. Iterated strict dominance, rationalizability. Correlated equilibrium.
  • A student should learn the specific of signaling games, separsting and pooling equilibrium and can construct and solve job market game.
  • A student should understand the main definition and apply it to market games.
  • Students should distinguish different solution concepts for dynamic games and apply them to real examples.
  • Tha student should learn the general specific of static games of incomplete information. She should find a Bayesian equilibrium in simple games. Know the classification of auctions and general approach to solving them.
  • The student should learn and solve the problems on the topics of: Dynamic games of complete information. Backward induction and subgame perfection. Critiques and limitations. Repeated games. Folk theorem.
Course Contents

Course Contents

  • Static games of complete information. Nash equilibrium. Iterated strict dominance, rationalizability. Correlated equilibrium.
  • Dynamic games of complete information. Backward induction and subgame perfection. Critiques and limitations. Repeated games. Folk theorem.
  • Static games of incomplete information. Bayesian equilibrium. Application to mechanism design problems.
  • Dynamic games of incomplete information. Perfect Bayesian equilibrium. Sequential equilibrium.
  • Trembling hand perfect equilibrium. Proper equilibrium.
  • Signaling games. Separating and pooling equilibria. Additional refinements and criteria. Applications: job-market signaling.
  • Reputation effects. Games with a single long-run player. Extensions.
  • Bargaining problem.
  • Cooperative games.
  • Evolutionary games.
  • Markov perfect equilibrium.
  • Limitations and contradictions of game theoretical approach
  • Hierarchical games. Bounded-rationality approach.
  • Screening model
  • Moral hazard
  • Matching theory
  • Social choice theory
Assessment Elements

Assessment Elements

  • non-blocking домашнее задание 1
    вес 0.1
  • non-blocking домашнее задание 2
    вес 0.15
  • non-blocking контрольная работа midterm
    after 3d module, Game Theory part of the course only
  • non-blocking домашнее задание 3
    вес 0.08
  • non-blocking домашнее задание 4
    вес 0.07
  • non-blocking домашнее задание 5
    вес 0.05
  • non-blocking домашнее задание 6
    вес 0.05
  • non-blocking финальный экзамен
    Экзамен проводится в письменной форме. Экзамен проводится на платформе Zoom (https://us02web.zoom.us/j/8577231768). К экзамену необходимо подключиться за 10 минут до начала. Компьютер студента должен удовлетворять требованиям: наличие рабочей камеры и микрофона, поддержка Zoom и MS Teams, возможность просматривать задания, выложенные на MS Teams, и загружать туда готовую работу. Для участия в экзамене студент обязан: включить камеру при подключении, подтвердить получение задания. Во время экзамена студентам запрещено: выключать камеру, получать помощь от кого-либо, кроме преподавателя. Во время экзамена студентам разрешено: пользоваться своими конспектами и слайдами лекций, задавать вопросы преподавателю (через чат или по телефону). Кратковременным нарушением связи во время экзамена считается нарушение связи / отсутствие студента перед экраном менее 3х минут. Долговременным нарушением связи во время экзамена считается нарушение связи более 3х минут или совокупное нарушение связи за время проведение экзамена на более 10 минут. При долговременном нарушении связи студент не может продолжить участие в экзамене и получает 0 баллов за экзамен без права пересдачи.
Interim Assessment

Interim Assessment

  • 2021/2022 4th module
    0.05 * домашнее задание 5 + 0.1 * домашнее задание 1 + 0.07 * домашнее задание 4 + 0.05 * домашнее задание 6 + 0.25 * контрольная работа midterm + 0.15 * домашнее задание 2 + 0.08 * домашнее задание 3 + 0.25 * финальный экзамен
Bibliography

Bibliography

Recommended Core Bibliography

  • A course in game theory, Osborne, M. J., 1994
  • An introduction to game theory, Osborne, M. J., 2004
  • An introduction to game theory, Osborne, M. J., 2009
  • Camerer, C. F., Ho, T.-H., & Chong, J.-K. (2004). A Cognitive Hierarchy Model of Games. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.4DA7457D
  • Contract theory, Bolton, P., 2005
  • Game theory : analysis of conflict, Myerson, R. B., 1997
  • Game theory : analysis of conflict, Myerson, R. B., 2004
  • Game theory, Fudenberg, D., 1991
  • Jacob K. Goeree, & Charles A. Holt. (2001). Ten Little Treasures of Game Theory and Ten Intuitive Contradictions. American Economic Review, (5), 1402. https://doi.org/10.1257/aer.91.5.1402
  • Microeconomic theory, Mas-Colell, A., 1995
  • Vincent P. Crawford, Miguel A. Costa-Gomes, & Nagore Iriberri. (2013). Structural Models of Nonequilibrium Strategic Thinking: Theory, Evidence, and Applications. Journal of Economic Literature, (1), 5. https://doi.org/10.1257/jel.51.1.5
  • Vincent P. Crawford. (2013). Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games. Journal of Economic Literature, (2), 512. https://doi.org/10.1257/jel.51.2.512

Recommended Additional Bibliography

  • Advances in behavioral economics, , 2004
  • Behavioral game theory : experiments in strategic interaction, Camerer, C. F., 2003