Microeconomics, Module 16, “The Theory of Games”

Micro module 16: Readings for eighth edition

(The attached PDF file has better formatting.)

Updated: October 19, 2010

{The Landsburg textbook is excellent.  We say to read certain sections and to skip others.  This does not mean that certain sections are better; it means that the homework assignments and exam problems are based on the sections that you must read for this course.  Some of the skipped sections are fascinating, but they are not tested.}

Read section 12.1 on pages 399-407. Focus on Nash equilibrium,  Pareto optimality, and dominant strategy.  Know well the prisoner’s dilemma game for the final exam.  The text uses three other games to illustrate the relations of dominant strategies to the possible outcomes (pigs in a box, battle of the sexes, and copycat games).  You will not be tested on the specifics of these other games, but you must know the methods of game analysis. The final exam does not ask “In the copycat game …,” but it may give a game that is a version of these games.

Skip “Mixed strategies” and “mixed strategies in sports” on pages 407-408.  Read from the bottom half of page 408 (Pareto optima) through Sequential Games, ending on page 413.  Know the definition of a sequential game for the final exam.

Read the summary on page 413. 

From the set on pages 414-415 work through the eight Jack and Jill games. Review questions 1 - 6 on page 416 which relate to these games. You will get a similar game on the final exam, with questions like these problems.

Review question 10 on page 416 (sequential games).