By and large, I will follow OR, Chapters 1l and 12, so I will keep these notes to a minimum. J Games with observed actions and payoff uncertainty Not all dynamic models of strategic interaction fit within the category of games with observed actions we have developed in the previous lectures. In particular, no allowance was made

The notion of subgame perfection is the cornerstone of the theory of extensive games. It embodies its key intuitions-and provides a vivid example of the difficulties inherent in such a theor But, above all, it has proved to be extremely profitable in a variety of applications. More- over, it has spawned a huge theoretical literature which has attempted(often successfully

These notes essentially tie up a few loose ends in Lecture 8; in particular, I exhibit examples of inefficiencies in first- and second-price auctions. I would also like to briefly comment on Questions 1 and 2 in Problem Set 2

Introduction The purpose of this lecture is to help you familiarize with the workings of sequential equi- librium and\sequential equilibrium lite\, i.e. perfect Bayesian equilibrium The main focus is the \reputation\result of Kreps and Wilson(1982). You should refer to OR for details and definitions: I am following the textbook quite closely We have already mentioned the Entry Deterrence game. Now consider a K-fold repetition

ome of the theoretical exercise I will assign are actually well-known results; in other cases you may be able to find the answer in the literature. This is certainly the case for the current My position on this issue is that, basically, if you look up the answer somewhere it's your problem. After all, you can buy answer keys to most textbooks. The fact is, you will not

Recall the following definitions: in any model M=(Q, (Ti, ai, piie), Ri is the event Player i is rational\;R=nieN Ri. Also, Bi(E) is the event \Player i is certain that E is true\ and B(E)=neN Bi(E). This is as in Lecture

Extend Proposition 151.1 (the Perfect Folk Theorem with discounting) to arbitrary mixtures of payoff profiles of the original game G =(, (A Ui) ) Allow for both rational and real weights on the set of profiles {u(a): a E A}; note that the statement of the result will involve an approximation of the payoff profile

Consider an interdependent-values auction with two bidders, each of whom observes an i.i.d

From or:226.1.227.1.229.1.237.1.243.1 For 243.1, also prove that the reputational equilibrium is sequential

By and large, I will follow OR, Chap. 8, so I will keep these notes to a minimum. ] The theory of repeated games is a double-edged sword. On one hand, it indicates how payoff profiles that are not consistent with Nash equilibrium in a simultaneous-move game might be achieved when the latter is played repeatedly, in a manner consistent with Nash or even subgame-perfect equilibrium