ECON 309 — GAME THEORY

SPR ‘23
Instructor : Ceren Soylu Lectures : MoWe 1:25PM – 2:15PM
Email : [email protected] (Zoom link available on Moodle)
Office Hours : MoWe 9:00AM – 10:00AM
(Zoom link available on Moodle)

This is a partly remote class with synchronous online-lectures and in-person discussion sections.

The class sessions will be recorded and posted on the course Moodle site. Only students enrolled in the
class will be able to view the recording. In this case, where access is limited to other students in the class, the
Family Educational Rights and Privacy Act (FERPA) -- the federal student privacy law -- does not limit or prevent
the use of recorded lectures and does not require obtaining a written consent.* However, if you have any concerns,
I will be happy to discuss them with you and consider appropriate accommodations.

Course Description
How do agents – people, firms, communities and governments – make choices?
What economic, social and political outcomes should we expect as a result of these choices?

When does the pursuit of self-interest by all individuals lead to socially efficient outcomes?
When does it lead to outcomes that no one likes?

How are the activities of free individuals, each seeking their own objectives, coordinated so as to achieve
socially desirable results? (David Hume, the 18th century British philosopher and economist, poses this
question as the most important problem facing society.)

These questions are certainly older than economics and have occupied many brilliant minds across centuries and
disciplines; and, these will be the questions that we will address using the analytical tools of Game Theory.

Game Theory provides a framework for understanding various social interactions, classified as strategic
interactions, that is, situations in which there is interdependence among the parties to the interaction. As such, it
is a way of understanding how agents interact based on the constraints that limit their actions, their motives, and
their beliefs about what others will do. Hence, each agent needs to anticipate their opponents’ next moves and,
accordingly, decide on how to act, while also knowing that their opponents are trying to do the same thing. Sounds
familiar? It is possible to find many examples for such strategic interactions between individuals, businesses,
political parties, nations etc. Game theory offers a way of analytical thinking, some of which is common sense
and some of which is counterintuitive, that helps explain and predict such interactions. So, it is no surprise that
game theory has applications in several fields ranging from economics, political science, sociology, business,
law, biology, computer science etc.

* See https://www.umass.edu/it/support/lecture-capture/lecture-capture-and-ferpa (Accessed on 8/31/2021.)

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Learning Outcomes
§ By using the game theoretical tools, you will be able to model a given interaction, as well as simulating
changes to it. In doing so, you will develop a commitment to finding effective strategies for agents – people,
firms, communities, governments – in strategic situations to address social, economic and political issues,
formulate predictions for likely outcomes of a given situation, or develop insights into the realized outcomes
of past events.
§ Interdisciplinary Outcome: This course will help you cross disciplinary boundaries to reveal new patterns and
connections that reframe your knowledge about human behavior. At the end, you will have acquired a new
set of tools to analyze social behavior from multiple perspectives.
§ Intellectual Skills Outcome: You are expected to gain many skills that have applications beyond the topic of
this course. The modeling experience you will gain will improve your ability to analyze and process
information more efficiently by identifying and focusing on the most relevant aspects. You will also improve
your quantitative reasoning and will be able to develop and apply appropriate quantitative problem-solving
skills in the context of various economic and social issues.

Textbook
[Required] Games of Strategy, Fifth Edition, Avinash Dixit, Susan Skeath, David McAdams, W. W. Norton
Publishers. ** The ebook version is recommended for digital resources.

[Recommended] The Art of Strategy, Dixit, A. and Barry J. Nalebuff. W. W. Norton Publishers, 2008. (This is a
popular, quasi-academic book that introduces the basic ideas and concepts in a non-technical way.)

Additional readings and lecture notes will be made available on the course website on Moodle.

Requirements and Grading

The final grade will have the following components:
§ midterm exam (15%) (April 3rd)
§ final exam (15%) (date TBD, check SPIRE)
§ take-home assignments (problem sets) (45%) – there will be five assignments (approximately biweekly); each
assignment will be posted on Moodle upon completion of a topic (at least one week before the due date)
§ quizzes (online) (15% total) – the weekly (pending adjustments based on holidays) quizzes will be online;
your lowest scored quiz will be dropped (if you take all the quizzes, the lowest score will be weighted
accordingly and added as extra credit)
§ class participation (5%) – measured via responses to polls during the live lectures
§ discussion sections attendance and participation (5%)

Exams, assignments and quizzes will cover textbook chapters, lecture notes and extra materials posted on the
course Moodle website. You will be tested on all the topics covered in the lectures including those that are not
covered in the textbook. You will not be tested on any topic that is not covered in class unless you are explicitly
assigned to study it.
Letter grades are typically as follows: A (94+), A- (90+), B+ (84+), B (80+), B- (77+), C+ (74+), C (70+), C-
(64+), D+ (60+), D (55+) and F (below 55). As the end-of-semester performance of all students in class might
call for an adjustment and/or scaling of grades, I reserve the right to make small changes to these cut-offs in favor
of the students.
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Course Plan
Following is a tentative schedule for the course. Take this as a broad indication: it is subject to change based on
how fast or slow we are able to go as a group. Accordingly, the assignment (problem set) due dates are subject to
change as well. As a general rule, you will have a problem set upon completion of each topic listed below, and
you will have at least one week to work on your problem set.
Any change will be announced in advance as much as possible. Please refer to Moodle for the updated schedule
and for additional readings.
*Check Moodle for additional readings.
Dates Topic & Readings* Deadlines
Feb 6 Read the syllabus
Feb 8 Summary of Main Concepts, Ch 1 & 2
Feb 13
Simultaneous Move Games: Discrete Strategies, Ch 4 Quiz 1 due F Feb 17
Feb 15
Feb 20 Holiday
Feb 22
Simultaneous Move Games: Mixed Strategies, Ch 7 Quiz 2 due F Feb 24
Feb 27
Quiz 3 due F Mar 3
Mar 1 Games with Sequential Moves, Ch 3
PS 1 due F Mar 3
Mar 6
Games with Continuous Strategies, Ch 5 Quiz 4 due F Mar 10
Mar 8
Mar 13
Spring Recess
Mar 15
Mar 20
PS 2 due F Mar 24
Mar 22 Combining Sequential and Simultaneous Moves, Ch 6
Quiz 5 due F Mar 24
Mar 27
Mar 29 Review Quiz 6 due F Mar 31
April 3 – MIDTERM (online)
Apr 5
PS 3 due F Apr 7
Apr 10 Uncertainty and Information, Ch 9
Quiz 7 due F Apr 14
Apr 12
Apr 17 Holiday
Apr 19 Quiz 8 due F Apr 21
Apr 24 The Prisoners’ Dilemma and Repeated Games, Ch 10 PS 4 due F Apr 21
Apr 26 Quiz 9 due F Apr 28
May 1 PS 5 due F May 5
Collective Action Games, Ch 11
May 3 Quiz 10 due F May 5
May 8
May 10 Evolutionary Games Quiz 11 due F May 12
May 15
May 17 Review

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Course policies

The “Virtual Classroom” on Moodle:

As an additional virtual meeting space, we also have an online platform, the “Virtual Classroom” forum on the
course Moodle site, for discussing course-related questions. You can post questions and answer each other’s
questions on this forum. I want you to be able to communicate with each other about content in the course and to
collaborate when you need help. You can learn a lot by asking questions, helping to answer other people’s
questions, and thinking out loud about different ideas you have. Also, when you post, you’re providing a public
service, a resource that others can use which is a helpful and community-minded thing to do. While responding
to/commenting on someone else’s post, you should not worry about providing incorrect or incomplete information
as I will be monitoring the forum to clarify any confusions and respond to your questions. So, in the process, you
will have checked your understanding as well by way of your comments on others’ questions.
I will kindly ask you to post any questions regarding the course logistics, course material and the
assignments on this forum rather than sending me or your TA an email. In all likelihood, you want to ask a
question the answer to which many people will benefit from, which is why I strongly recommend posting to the
forum.
We are always happy to provide hints and help out with the assignments. We are more comfortable doing
so, and we provide more extensive help, if the question is posted on this forum as the information/instruction
would then be available to everyone in the class; hence, eliminating any issues of fairness.

Email & Communication Policy:

I encourage you to email me about issues that pertain to you personally. I shall do my best to respond to email
within 24 (business) hours, i.e. within one day during the week and by the end of Monday if you sent the email
on Friday or over the weekend.
I will not answer detailed conceptual questions about problems sets or course material in emails. If you
have such questions, come by my office hour or schedule a meeting, or post to the Virtual Forum on Moodle (see
above).
For course related questions, please first check the syllabus, Moodle and your emails for the
announcements I send to the class.

Missed Assignments and exams:

Late submissions of assignments will not be accepted. In documented extenuating circumstances, I reserve the
right to make reasonable arrangements.
Make-up exams will be given only in case of documented medical emergency, bereavement, court
appearance, and in accordance with the University regulations concerning exam conflicts.

Academic Honesty Policy Statement:

Since the integrity of the academic enterprise of any institution of higher education requires honesty in scholarship
and research, academic honesty is required of all students at the University of Massachusetts Amherst.
Academic dishonesty is prohibited in all programs of the University. Academic dishonesty includes but is
not limited to: cheating, fabrication, plagiarism, and facilitating dishonesty. Appropriate sanctions may be
imposed on any student who has committed an act of academic dishonesty. Instructors should take reasonable
steps to address academic misconduct. Any person who has reason to believe that a student has committed
academic dishonesty should bring such information to the attention of the appropriate course instructor as soon

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as possible. Instances of academic dishonesty not related to a specific course should be brought to the attention
of the appropriate department Head or Chair. The procedures outlined below are intended to provide an efficient
and orderly process by which action may be taken if it appears that academic dishonesty has occurred and by
which students may appeal such actions.
Since students are expected to be familiar with this policy and the commonly accepted standards of
academic integrity, ignorance of such standards is not normally sufficient evidence of lack of intent.
For more information about what constitutes academic dishonesty, please see the Dean of Students’
website: http://umass.edu/dean_students/codeofconduct/acadhonesty/
The University of Massachusetts Amherst is committed to providing an equal educational opportunity for
all students. If you have a documented physical, psychological, or learning disability on file with Disability
Services (DS), Learning Disabilities Support Services (LDSS), or Psychological Disabilities Services (PDS), you
may be eligible for reasonable academic accommodations to help you succeed in this course. If you have a
documented disability that requires an accommodation, please notify me within the first two weeks of the semester
so that we may make appropriate arrangements.

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Tips
Learning game theory is similar to learning a new programming language. As with any new language/tool, the
learning process can be a challenging, but it can also be very rewarding.
At this background, here are some keys to doing well in this class:

Keep up: Concepts build on each other and we will move quickly through topics. If you wait until right before a
problem set due date or exam to make sure you understand the material, you may find yourself overwhelmed.
Review each lecture and make sure that you clarify any confusions either in the next lecture or during office
hours. Start working on the problem sets as soon as they are posted, and once the solutions are available, make
sure to review your answers.

Explain: Practice explaining in addition to doing problems. This course may seem like math-heavy and
theoretical, yet the intuitive component is just as, if not more, important than the analytical methods. To succeed
in this course, you need to be comfortable solving specific problems, to understand why your answers are correct,
and to apply ideas in different contexts. Always check your understanding of the intuition behind the technical
components. Be like a toddler and tirelessly ask “WHY?” for each and every step of the analysis that we conduct.
Practice explaining new ideas to your classmates, your roommates, your friends, your parents or anyone else you
can convince to listen. Try to find examples of what we learn in class in your life and in real life. Read in the
newspaper, the Economist, economic blogs, or other sources and try to use the models from class to explain the
article.

Ask for help: If you find yourself struggling with an idea, ask for help as soon as you can. You can post your
questions to the aforementioned Virtual Classroom forum on Moodle to get a discussion started with me and
others in the class. If I believe that your question will be better addressed by way of a meeting, I will ask to set
up a Zoom meeting. Also, I’m always available during my office hours. I’m also happy to make appointments
outside of office hours.

Problem Sets: The problem sets are designed to be learning experiences, giving you practice working with and
applying the concepts from class. The questions are intentionally challenging and not simply examples from class
with different numbers. In many cases, you may need to think about a problem for a while before you will see
how to answer the question.
I strongly encourage you to work on these problems (and your problem sets) in groups, with two caveats:
First, you must prepare and submit your own answers - your own explanations of how you arrived at a solution,
your own step (or mis-step) when arriving at a mathematical answer, etc. Second, I highly recommend that you
try the assignment individually first. This will be helpful in two ways. First, you are more likely to do well on the
midterm and final by getting practice through the assignments. (Remember, you can’t work together on the
midterm and final exams.) Second, both you and your classmate are more likely to do well on the assignment
itself by putting two separate minds on it.
Always review your answers as soon as the solutions are available, while your memory of your reasonings
is still fresh. You should do so regardless of the point grade you get: Given my grading method, you may get a
high point grade even if you get many parts of the problem set incorrect.

Feedback – sooner rather than later! If you have feedback or concerns, bring them up with me sooner rather
than later. If there’s something that we can adjust right away, I will try my best to do so.