# Economics 684: Game Theory, Spring 2017

Instructor: Jeremy A. Sandford

Office phone number: 202-326-2766

email:jsandford@jhu.edu

Lecture: 6:00-8:45pm Thurs, Washington DC Center, room 600U

Homework #1, answers

Homework #2, (LaTeX version), answers

Homework #3, (LaTeX version), answers

Homework #4, (LaTeX version), answers

Homework #5, (LaTeX version), answers

Homework #6 (uncollected), answers

# Schedule

**Thursday, January 12:** Introduction, normal form games, dominated strategies, Nash equilibrium, best response functions

reading: Gibbons, chapter 1

The poison scene in *The Princess Bride* (the entire movie is available on Netflix)

**Thursday, January 19:** Evolutionary interpretation of Nash equilibrium, games with infinite strategy sets, the tragedy of the commons

reading: Gibbons, chapter 1

**Thursday, January 26:** Dynamic games of complete information, backwards induction, commitment, subgame perfect equilibrium.

reading: Gibbons, chapter 2 (excluding section on repeated games)

Interview with Thomas Schelling

Wikipedia article on solved games

**Thursday, February 2:** Dynamic game applications, infinitely repeated games

reading: Gibbons, chapter 2

**Thursday, February 9:** Infinitely repeated games

reading: Gibbons, chapter 2

**Thursday, February 16:** infinitely repeated games, efficiency wage application

reading: Gibbons chapters 2-3

optional reading: "Did Henry Ford pay efficiency wages?" by Daniel Raff and Lawrence Summers, *Journal of Labor Economics*, 5(4), pp.S57-S86.

optional reading: *The Simpsons* on monitoring and punishing low effort

optional reading: Did Henry Ford Pay Efficiency Wages?

**Thursday, February 23:** Midterm exam, answers, (2016 midterm exam, answers, 2015 midterm exam, answers)

**Thursday, March 2:**Bayesian games, independent values first and second price auctions, common values first price auctions

reading: Gibbons, chapter 3

**Thursday, March 9:** Extensive form Bayesian games, perfect Bayesian equilibrium

reading: Gibbons, chapter 4

**Thursday, March 16:** Signalling games, Spence education model, the intuitive criterion

reading: Gibbons, chapter 4

**Thursday, March 23:** no class (spring break)

**Thursday, March 30:** Statistical discrimination and pervasive wage differentials (slides)

reading: Coate, S. and G. Loury (1993), Will affirmative-action policies eliminate negative stereotypes? *AER*, 83, pp.1220-1240

optional reading:Bertrand, M. and E. Duflo (2017). "Field experiments on discrimination," in A. Banerjee and E. Duflo eds., *Handbook of Field Experiments*

**Thursday, April 6:** Statistical discrimination and pervasive wage differentials

reading: Coate, S. and G. Loury (1993), Will affirmative-action policies eliminate negative stereotypes? *AER*, 83, pp.1220-1240

**Thursday, April 13:** Affirmative action in the Coate/Loury model, models of collusion

reading: Coate, S. and G. Loury (1993), Will affirmative-action policies eliminate negative stereotypes? *AER*, 83, pp.1220-1240

optional reading: AEA piece on naming Glenn Loury a Distinguished Fellow

optional reading: Glenn Loury writing about racial tension at Brown University (much of his public facebook page is also potentially of interest)

**Thursday, April 20 (in class):** Final exam, answers