Lecture 24 - Asymmetric Information: Auctions and the Winner's Curse
We discuss auctions. We first distinguish two extremes: common values and private values. We hold a common value auction in class and discov...
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Yale Open Courses ECON 159: Game Theory
About the Course This course is an introduction to game theory and strategic thinking. Ideas such as dominance, backward induction, Nash equilibrium, evolutionary stability, commitment, cred...
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20 of 24 episodesLecture 23 - Asymmetric Information: Silence, Signaling and Suffering Education
We look at two settings with asymmetric information; one side of a game knows something that the other side does not. We should always inter...
Lecture 22 - Repeated Games: Cheating, Punishment, and Outsourcing
In business or personal relationships, promises and threats of good and bad behavior tomorrow may provide good incentives for good behavior...
Lecture 21 - Repeated Games: Cooperation vs. the End Game
We discuss repeated games, aiming to unpack the intuition that the promise of rewards and the threat of punishment in the future of a relati...
Lecture 20 - Subgame Perfect Equilibrium: Wars of Attrition
We first play and then analyze wars of attrition; the games that afflict trench warfare, strikes, and businesses in some competitive setting...
Lecture 19 - Subgame Perfect Equilibrium: Matchmaking and Strategic Investments
We analyze three games using our new solution concept, subgame perfect equilibrium (SPE). The first game involves players’ trusting that oth...
Lecture 18 - Imperfect Information: Information Sets and Sub-Game Perfection
We consider games that have both simultaneous and sequential components, combining ideas from before and after the midterm. We represent wha...
Lecture 17 - Backward Induction: Ultimatums and Bargaining
We develop a simple model of bargaining, starting from an ultimatum game (one person makes the other a take it or leave it offer), and build...
Lecture 16 - Backward Induction: Reputation and Duels
In the first half of the lecture, we consider the chain-store paradox. We discuss how to build the idea of reputation into game theory; in p...
Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats
We first discuss Zermelo’s theorem: that games like tic-tac-toe or chess have a solution. That is, either there is a way for player 1 to for...
Lecture 14 - Backward Induction: Commitment, Spies, and First-Mover Advantages
We first apply our big idea–backward induction–to analyze quantity competition between firms when play is sequential, the Stackelberg model....
Lecture 13 - Sequential Games: Moral Hazard, Incentives, and Hungry Lions
We consider games in which players move sequentially rather than simultaneously, starting with a game involving a borrower and a lender. We...
Lecture 12 - Evolutionary Stability: Social Convention, Aggression, and Cycles
We apply the idea of evolutionary stability to consider the evolution of social conventions. Then we consider games that involve aggressive...
Lecture 11 - Evolutionary Stability: Cooperation, Mutation, and Equilibrium
We discuss evolution and game theory, and introduce the concept of evolutionary stability. We ask what kinds of strategies are evolutionaril...
Lecture 10 - Mixed Strategies in Baseball, Dating and Paying Your Taxes
We develop three different interpretations of mixed strategies in various contexts: sport, anti-terrorism strategy, dating, paying taxes and...
Lecture 9 - Mixed Strategies in Theory and Tennis
We continue our discussion of mixed strategies. First we discuss the payoff to a mixed strategy, pointing out that it must be a weighed aver...
Lecture 8 - Nash Equilibrium: Location, Segregation and Randomization
We first complete our discussion of the candidate-voter model showing, in particular, that, in equilibrium, two candidates cannot be too far...
Lecture 7 - Nash Equilibrium: Shopping, Standing and Voting on a Line
We first consider the alternative “Bertrand” model of imperfect competition between two firms in which the firms set prices rather than sett...
Lecture 6 - Nash Equilibrium: Dating and Cournot Overview
We apply the notion of Nash Equilibrium, first, to some more coordination games; in particular, the Battle of the Sexes. Then we analyze the...
Lecture 5 - Nash Equilibrium: Bad Fashion and Bank Runs
We first define formally the new concept from last time: Nash equilibrium. Then we discuss why we might be interested in Nash equilibrium an...