TOPICS IN MICROECONOMICS - II

 

Course Description

This course deals with repeated games and games with incomplete information. Ideas related to asymmetric information among the interacting economic agents would be the main focus of this course. Students learn the concept of Bayesian and Perfect Bayesian equilibrium. The course ends with the application of game theory to analyse moral hazard, adverse selection and signalling problems.

Course Outline

1. Repeated Games
Finitely repeated games and backward induction; infinitely repeated games; history
dependent strategies; one-step deviation property; the repeated prisoners‘ dilemma; idea
of folk theorem.

2. Simultaneous move games with incomplete information (Bayesian games)
Strategies; Bayesian Nash equilibrium; auctions; other applications.

3. Extensive form games with imperfect information
Strategies; beliefs and sequential equilibrium; applications.

4. Information economics
Adverse selection; moral hazard; signalling games.

THIS SECTION COMPRISES PREVIOUS YEAR QUESTION PAPERS;





Readings:

1. Martin J. Osborne, An Introduction to Game Theory, Oxford University Press, New Delhi, 2004.

2. Hugh Gravelle and Ray Rees, Microeconomics, Pearson Education, 2nd edition,
1992.


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