Courses 2014

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Course NameGame Theory and Industrial Organization 2
InstructorNishijima, Masuyuki
MajorMajor Subjects
Course goals
Course outlineThis course is conducted in English.

The purpose of this course is to introduce to you Game Theory in English. The focus in this course is on applications of game theory to problems of business strategy. How much should Saudi Arabia produce its crude oil when OPEC countries fail to agree on their quota? What price should nearby outlets of electric appliances charge for DVD recorders? What if they offer the most favored clause? Where should fast-food chains locate their outlets? These are just a few of many problems that game theory can successfully analyze. Game theory is now used as an analytical tool in almost all fields of social sciences. Since game theory is mathematical in its nature, you are required to be patient to understand its concepts and analytical tools step by step.

Why do I lecture in English? There are many Japanese who are able to speak English. But there are a limited number of Japanese who could argue Economics and Business in English. Another aim of this course is to give you opportunity to discuss and think economic/business problems in English.

The official language in this course is English.

The class consists mainly of my lecture. However, you are required to submit a short report in English on what you do not understand at the first reading of every week assignment. Your short report must have at least one question, and be submitted to me no later than at the beginning of the class. (I never accept your short report once the class begins.) In the class, I let you ask and clarify some questions in English, based on your short report. This will give you an opportunity to speak English with much less hesitation. I will adjust the way I teach in the class, depending on participants' English proficiency.

Problem Sets are designed to check your understanding of contents. Problem Sets must be submitted to me no later than at the beginning of the class on the due date. I never accept your answers after the class begins.

You will present how to solve a short-case problem in English. (See Schedule for Presentation and Discussion of Short Cases.) You are required to prepare a draft of your presentation and come to my office for advice during a week before your presentation. This exercise makes you used to a short talk in English at the same time it helps you to acquire analytical tools of game theory.

In Review Sessions, I will demonstrate how we can solve some problems in the Problem Sets. In Game Theory and Industrial Organization II, we focus on extensive form games.
Evaluation Scale and PoliciesProblem Sets: 20%, Class Participation & Short Reports: 40% , Presentation: 40%
PrerequisitesSee the outlines of this course. Take Game Theory and industrial Organization I at the same time.
Texts, materials, and suppliesThe textbook is "Strategies and Games: Theory and Practice," by Prajit, K. Dutta, The MIT Press, Cambridge Massachusetts, 1999. The copies are provided by the instructor.
Course Schedule/PlanThe following schedule is tentative, subject to change on a short notice.

September 22:
Introduction A Brief Review of Strategic Form Games
September 29:
Chapter 11 Extensive Form Games and Backward Induction; pp.157-174.
October 6:
Chapter 13 Subgame Perfect Equilibrium; pp.193-205.
October 20:
Chapter 14 Finitely Repeated Games; pp.209-222.
October 27:
Chapter 15 Infinitely Repeated Games; pp.227-237.
November 10:
Review Session (I) Due date of Problem Set No.1
November 17:
Chapter 19 Moral Hazard and Incentives Theory; pp.293-305.
November 24 :
Chapter 20 Games with Incomplete Information; pp.309-326.
December 1:
Chapter 22 Mechanism Design, the Revelation principle, and Sales to An Unknown Buyer; pp.349-362.
December 8:
Chapter 23 An Application: Auctions; pp.367-377.
December 15:
Chapter 24 Signaling Games and the Lemon Problem; pp.383-395.
December 22:
Review Session (II) Due date of Problem Set No.2
January 19:
Presentation and Discussion of Short Cases
January 26:
Reserved for schedule change or office hours