Economics 431: Games and Decisions
Spring 2001

Lecture Notes Exercises Quizzes Exams
Items on Reserve In-Class Games Game Theory Links

Meets Mondays and Wednesdays, 12:30 - 1:45, in McClelland 130.
Exercise and review session meets Mondays, 5:30 - 6:30, in McClelland 130.

Professor: Mark Walker.
Office hours: Wednesday 2:15 to 3:00, McClelland 401G
Also by appointment:

Teaching Assistant: Bill Janss
Office hours: Tuesday 2:00 to 3:00, McClelland 401X
Also by appointment:

Textbook: P. Dutta: Strategies and Games, MIT Press.
You'll also find it helpful to read Roger McCain's introduction to game theory.

Optional course materials will regularly be made available for purchase at the Harvill Copy Center, in Room 137 of the Harvill Building. These will include such things as lecture notes, solutions to exercises and exams, optional additional exercises, etc. The total cost of all these optional items, over the course of the semester, will be less than ten dollars.

I expect you to have an email account and to check it regularly. I'll often make course announcements by email, and otherwise communicate with everyone in the class via email. Moreover, you'll find it much easier to communicate with me or with the TA by email than by phone.

Course description

This course is an introduction to decision theory and game theory. Decision theory is the study of decision making in the presence of uncertainty. It tells us how to devise a plan or strategy for the acquisition of information and for what actions to take when new information is acquired, and how to determine the value of information.

Where decision theory studies decision making by a single decision-maker (an individual, a firm, a single government, etc.), game theory is concerned with interaction among multiple decision-makers -- situations in which the outcome of my own decision depends upon what others do as well as upon what I do. Game theoretic methods have become central to economic analysis in recent years. We will use game theory to study bargaining, competition in markets with only a few large firms, arbitration procedures, contracts between agents and their "principals," employee compensation arrangements, the value of reputation, strategic voting, competition among political parties, and other economic and political subjects.

Exercises, Quizzes, Exams, and Grading:

Regular exercises will be assigned. The exercises will give you practice and feedback on how you're doing. The exercises will not be graded, but if you talk about them with the TA or with me, we'll be glad to tell you how you're doing and to help you with any difficulties you're having. The TA will hold office hours; you should take advantage of this opportunity to get help. There will sometimes be a brief quiz during lecture; the quiz will be a part of one of the exercises you have been assigned, or will be very similar to one of the exercises. The quizzes will count as one "unit" in determining your course grade (see below). Your worst two quiz grades will be discarded (except that if you choose not to take the final exam, no quiz grade after the last midterm will be discarded). Missed quizzes cannot be made up.

There will be two mid-term exams and a comprehensive final exam. The quizzes are one unit, each mid-term exam is one unit, and the final exam is two units. Your course grade will be the average of your best three grades from among those five units. In other words, your worst two grades will be discarded. (An example: Quizzes B; Mid-term exams F and B; Final exam C. The F and one C are discarded, leaving you with two Bs and a C, and your course grade is therefore a B-. If the Bs and the C are very high ones, your grade is a B; if all are very low, it might be a C+. But only these three grades are counted.)

!! There will be no make-up exams !!
( This includes the final exam )


1st Midterm Exam: Wed., February 21.
2nd Midterm Exam: Wed., April 18.
Final Exam: Monday, May 7, 11:00 am.

First Midterm Exam Grade Distribution (after the retake):

   Grade Points #Exams   (Each of the four problems was worth 20 points.)
      A   71-80   12
      B   61-70   14
      C   51-60    5
      D   45-50    1
      F    0-44    5
                  37 exams

Second Midterm Exam Grade Distribution (after the retake):

   Grade Points #Exams   (Problems worth 15,20,20,20 points.)
      A   65-75    4
      B   55-64   11
      C   45-54   13
      D   35-44    6
      F    0-34    2
                  36 exams


The scoring of the quizzes is as follows:
4: Good
3: Mostly correct
2: Some things correct, some incorrect
1: Mostly incorrect
0: Nothing answered correctly

The following quizzes and quiz solutions are available by clicking on them. The remaining quiz solutions can be found as exercise solutions.
Quiz #1
Quiz #1 Solution
Quiz #2
Quiz #2 Solution
Quiz #5
Quiz #5 Solution

Items At Harvill Copy Center

1. Notes from Lecture 3 (M 1/22)
2. Notes from Lecture 4 (W 1/24)
3. Solutions for Exercise Set #1
4. Solutions for Exercise Set #2
5. Notes from Lecture 8 (W 2/7)
6. Solutions for Exercise Set #3
7. Solutions for Exercise Set #4
8. Notes from Lecture 18 (W 3/21)
9. Notes from Lecture 19 (M 3/26)
10. Notes from Lecture 20 (W 3/28)
11. Notes from Lecture 21 (M 4/2)
12. Solutions for Exercise Set #7
13. Notes from Lecture 23 (M 4/9)
14. "Certainty Monetary Equivalent"
15. "Plotting Your Own VM Utility Function"
16. An Extensive Form Game: Nim
17. Solutions for Exercise Set #8
18. A Simple Poker Game
19. Games of Perfect Information

In-Class Games

1. The Prisoners' Dilemma
2. Auctions
3. An Oligopoly Game
4. Winner-Take-All Matches in the Lab

Some Interesting Game Theory Links Mark Walker's Home Page