By Krishna Ladha
Offered to: Class of 2020, 2021, and 2022
Prerequisites: Basic Mathematics, No Calculus
Office Hours: By appointment
The purpose of game theory is to predict how a game might be played. A game arises when a player's payoff depends on what others do. A game has players (e.g., individuals, animals, genes, organizations, nations) and rules (e.g., who moves in what order), and each player has strategies (e.g., cooperate or defect; fight or not fight), information pertaining to the game, and payoffs under each scenario. The idea is to find solution(s): one strategy for each player such that the strategies are best responses to each other.
Almost every economic, social or political interaction is a game. Applications include problems associated with cooperation (as in Prisoner's Dilemma game or Trust game), bargaining (e.g., labor-management, buyer-seller, government-government), auctions (e.g., auction of wireless spectrum or public projects), pricing, principal-agent relations, contracting, signaling, committee decisionmaking, political competition, microfinance, and Economic Development.
Along the way, the students would learn the work of several Nobel Laureates in Economics; about a dozen won the prize between 1994 and 2017 for their work related to game theory.