EC 3395B-001: Course Outline

1. Introduction

1.1.        Poker games

2. Single person decision problem

2.1.        Review of probability theory (probability and probability distribution; random variables and expectations; conditional probabilities and Bayes’ rule)

2.2.        Static choice under uncertainty (expected utility; risk aversion; portfolio choice problem; value of information)

2.3.        Dynamic choice under uncertainty (decision trees and backward induction; consumption and saving under uncertainty; optimal search)

3. Games with incomplete information

3.1.        Review of game theory (static and dynamic games with complete and incomplete information)

3.2.        Applications (signaling and “cheap talk”; auctions; “market for lemons” model; “career concerns” model)

4. Contract theory and mechanism design

4.1.        Contract theory (adverse selection; moral hazard)

4.2.        Mechanism design (optimal auctions; bargaining; matching markets)