Lectures on Expected Utility and Games
Developments in Microeconomics
ECC001
Topic 1 – Lectures 1 and 2
Recap – Expected Utility and Basic Game Theory
Chris Wilson
Handout
1
Topic 1: Recap – Expected Utility and Basic Game Theory
1
Expected Utility and Attitudes to Risk
2 Normal Form Games
2a Dominant Strategies
2b Nash Equilibrium
2c Continuous Strategy Spaces - Cournot
3 Extensive Form Games
3a Backward Induction and Subgame Perfection
2
You will be familiar with some of the content in this topic.
However, from past experience, most students will find it beneficial to consider this material again because it forms the major platform for the rest of this module and because we will present with a different perspective.
More importantly, students should note that the content of this topic is may also be assessed directly in the coursework and summer exam.
Due its familiarity, I will also go through the material relatively quickly and expect you to cover more reading than I would for other topics.
3
Reading for Topic 1, Lectures 1-4
Expected Utility and Attitudes to Risk:
*
Perloff
Ch. 17.1-17.2
* and
Watson
p.299-303
(or past edition)
Basic Game Theory:
*
Carmichael Ch. 1, 2, 4 (and 3)
* and/or Watson
Ch.1-3, 5-6, 9, 14, 15 and p.107-09
* and/or Gibbons
p.1-12, 14-21, 55-61, 71-73
Recap: Inter Micro notes, Church+Ware1 Ch.7, p.283-292
Supplementary: Rasmusen
Ch.1, 2, 4
Fun: Harford (2008) Ch.2
1
This might be especially useful as it can be accessed online at http://homepages.ucalgary.ca/~jrchurch/page4/page5/files/PostedIOSA.pdf
4
Reading
Carmichael is the least technical of the three options (and has no treatment of
Cournot). Watson’s chapters are short so don’t panic. Watson is harder and will offer most benefits to those of you who are more confident – see end of lecture notes for more. Gibbons is in between the two but a bit brief.
In all of these readings, please feel free to IGNORE any references to
ECC001
Topic 1 – Lectures 1 and 2
Recap – Expected Utility and Basic Game Theory
Chris Wilson
Handout
1
Topic 1: Recap – Expected Utility and Basic Game Theory
1
Expected Utility and Attitudes to Risk
2 Normal Form Games
2a Dominant Strategies
2b Nash Equilibrium
2c Continuous Strategy Spaces - Cournot
3 Extensive Form Games
3a Backward Induction and Subgame Perfection
2
You will be familiar with some of the content in this topic.
However, from past experience, most students will find it beneficial to consider this material again because it forms the major platform for the rest of this module and because we will present with a different perspective.
More importantly, students should note that the content of this topic is may also be assessed directly in the coursework and summer exam.
Due its familiarity, I will also go through the material relatively quickly and expect you to cover more reading than I would for other topics.
3
Reading for Topic 1, Lectures 1-4
Expected Utility and Attitudes to Risk:
*
Perloff
Ch. 17.1-17.2
* and
Watson
p.299-303
(or past edition)
Basic Game Theory:
*
Carmichael Ch. 1, 2, 4 (and 3)
* and/or Watson
Ch.1-3, 5-6, 9, 14, 15 and p.107-09
* and/or Gibbons
p.1-12, 14-21, 55-61, 71-73
Recap: Inter Micro notes, Church+Ware1 Ch.7, p.283-292
Supplementary: Rasmusen
Ch.1, 2, 4
Fun: Harford (2008) Ch.2
1
This might be especially useful as it can be accessed online at http://homepages.ucalgary.ca/~jrchurch/page4/page5/files/PostedIOSA.pdf
4
Reading
Carmichael is the least technical of the three options (and has no treatment of
Cournot). Watson’s chapters are short so don’t panic. Watson is harder and will offer most benefits to those of you who are more confident – see end of lecture notes for more. Gibbons is in between the two but a bit brief.
In all of these readings, please feel free to IGNORE any references to