Course ECO 4301 Introduction to Game Theory

Professor Todd Sandler

Term Fall 2010
Meetings Mon, Wed, 9:30-10:45am GC 1.208B

Professor’s Contact Information

Office Phone 972-883-6725
Other Phone Administrative Assistant, Molly Dickinson 6724
Office Location GR 2.539 (enter GR 2.828)
Email Address tsandler@utdallas.edu
Office Hours Mon 10:50-11:50 am, Wed 12:00-1:00 pm
Other Information Do not send me e-mail attachments unless I indicate otherwise to you.

General Course Information

Pre-requisites, Co-
requisites, & other Basic Algebra skills, elementary calculus.
restrictions
This class provides a nontechnical introduction to modern game theory.
In the last thirty-five years, game theory has become an essential tool in
economics, political science, international relations, business
administration, and other fields. Strategic behavior, the hallmark of game
theory, involves how one agent (person, nation, firm, government, or
institution) behaves when its choices depend on those of others.
Interactive rational choices that cause players’ payoffs to be
interdependent are viewed as strategic. If, however, what I choose to do
is not affected by what another does, then my choice is not strategic.
Strategic behavior also involves a recognition of choice interdependence;
one player thinks that the opponent(s) will behave in a certain manner and
Course Description acts on this presumption. Similarly, the opponent anticipates the other
player’s belief-based actions and chooses a strategy based on this belief,
and so it goes. Each player is putting herself in the other’s shoes and
basing her own behavior on how her counterpart would act in these
circumstances, knowing that each is trying to anticipate the other’s
optimizing actions.
The course is rich in applications to economics, political science
and other situations. Most of the readings come from the two textbooks.
There are a wide variety of game theory books available and students
should, at times, consult other books for a more in-depth treatment of a
topic or for a clearer explanation.

Provide students with a basic knowledge of game theory and its

application to economics, political science and related disciplines.
Learning Outcomes
Students will be able to read articles, journals and books that use basic
game theory. Students can apply game theory to problems.

Textbooks:
Required Texts &
Materials
Dixit, Avinash , Susan Skeath, and David Reiley Jr., Games of Strategy,
3rd Edition (NY: W.W. Norton & Co., 2009) (called DS below) ISBN
 978-0-393-93112-9.

Sandler, Todd, Global Collective Action (Cambridge: Cambridge

University Press, 2004). (called GCA below). ISBN 0-521-54254-5.

Readings on Reserve:

Sandler, Todd and Keith Sargent (1995), “Management of Transnational

Commons: Coordination, Publicness, and Treaty Formation,” Land
Economics, Vol. 71, No. 2, 145-162. (Available on WebCT).

Sandler, Todd (2005), “Collective versus Unilateral Responses to

Terrorism,” Public Choice, Vol. 124, No. 1-2, July, 75-93. (Available on
WebCT).

Sandler, Todd (1992), Collective Action: Theory and Applications (Ann

Arbor: University of Michigan Press, 1992).

Assignments & Academic Calendar

[Topics, Reading Assignments, Due Dates, Exam Dates]
Week Topic Assignment
1 Introduction DS Chapters 1-2
GCA Chapter 1

2-3 Sequential Moves & Simultaneous DS Chapters 3-4

Moves GCA Chapter 2

4 Simultaneous Moves: Continuous DS Chapters 5

Strategies

5-6 Mixed Strategies DS Chapter 7-8

Sandler and Sargent (1995)
Sandler (2005)

Exam 1: September 22, 2010

7 Repeated Prisoners’ Dilemmas DS Chapter 11

8 Public Goods/Externalities DS Chapter 12

GCA Chapters 3-4
Collective Action (1992) pp. 27-35

9 Games with strategic moves DS Chapter 10, 15

Exam 2: October 20, 2010

10-11 Applications GCA Chapters 5, 8, 11

12 Strategy and voting DS Chapter 16

 Exam 3: November 17, 2010
13-14 Evolutionary Games and maybe DS Chapter 13
Bargaining (Maybe DS Chapter 18)

Exam Dates Exam 1 September 22, 2010

Exam 2 October 20, 2010
Exam 3 November 17, 2010
Final Exam December 15, 2010 at 8am in our regular classroom

Please note that I will assign homework each week to further your
understanding. These will not be collected or graded. Some problems
assigned may appear on exams. Answers to homework can be found at
http://www.wwnorton.com/college/nrl/econ/games3/welcome.htm
And download the zip file with solutions to solved problems.

I will also provide some sample questions prior to each of the three in-
class exams. I will hold one review session outside of class hours (to be
announced) to go over the exam and prepare you. Often 5-6 pm works.

I hope that we can start each exam – if agreed – a few minutes early to
provide more time. There is no class right after us so if possible and
agreeable, we could expand the exam time by 10 minutes to give more
time. We will discuss this possibility. The Final Exam is cumulative.

Course Policies
The class grade is determined as follows:

Exam 1 25%
Exam 2 25%
Exam 3 25%
Final Exam 25%

I do not give make-up exams, no matter what. If you miss Exam 1 or 2 or

3 because of sickness, circumstances (e.g., death in family), or choice, then
your grade will be determined as follows:

Grading (credit) Two In-class Exams taken 50% in total (25% each)
Criteria Final Exam 50%

If you miss two in-class exams, then the Final Exam will count 75% and
the one in-class exam will be worth 25%. If you miss all three in-class
exam, then the Final Exam will count 100%. Be forewarned: past
experience indicates that students who take more exams tend to do
better. I cannot emphasize this enough.

Grades are not like hostage-taking events, there will be no bargaining

over grades or arguing over answers. If you need a good grade, then
work hard, come to class, and do sample problems and you will be fine. I
cannot and will not make up extra credit assignments so that you get the
 grade that you desire.

Make-up Exams No make-up exams, no matter what.

Students missing no more than one class within the weeks prior to each
exam will have five points added to their exam score. (Remember, no
excuses are accepted for missing a class. You are given one free miss per test
Extra Credit
period.) Also, you must be in your seat within 5 minutes of the start of class
– coming in 6 minutes late, or leaving early will not qualify as an attendance
for extra credit. If you start the semester late, then the classes missed will be
counted as absences for attendance
Special
None
Assignments
Class Attendance Strongly recommended
Classroom
No talking in class.
Citizenship
For material on Religious Holy Days, Disability Services, Student Conduct etc. see
Ancillary
material
http://go.utdallas.edu/syllabus-policies