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Game Theory and Economics of Information

Summary

Game theory is the study of multiperson decision problems where there is a strategic conflict. That is, where participants are aware that the result or payoff they obtain depends not only on her own decision but also on the decisions of other participants. Society, and economy in particular, is plenty of these strategic interactions. The first part of the course covers the equilibria of strategic games with complete (review) and incomplete information, sequential games with complete information, negotiation and repeated games. Sequential games with incomplete information close the first part of the course. In the second part, the course studies canonical models of adverse selection and moral hazard. More specifically, we will look at how to design optimal contracts in the presence of asymmetric information. Contract theory is an important branch of applied microeconomic theory, and its tools are increasingly being used in labor and development economics, as well as in industrial organization. Thus, the course is of potential interest to those outside of pure microeconomic theory.