Advanced Microeconomics
                     Advanced Microeconomics
                         ECON5200 - Fall 2014
  Advanced Microeconomics
    Introduction
         I What you have done:
              - consumers maximize their utility subject to budget constraints
                and …rms maximize their pro…ts given technology and market
                prices;
              - no strategic behavior.
         I What we will do:
              - in many interesting situations, agents’optimal behavior
                depends on the other agents’behavior;
              - strategic behavior.
         I Game theory provides a language to analyze such strategic
            situations;
         I Countless number of examples! Auctions, Bargaining, Price
            competition, Civil Con‡icts...
  Advanced Microeconomics
    Introduction
  Road map
        I Static Game:
            1. With Complete Information (I);
            2. With Incomplete Information (II).
        I Dynamic Game:
            1. With Complete Information (II-III);
            2. With Incomplete Information (III).
     Advanced Microeconomics
         Strategic Games with Complete Information
     Strategic Game with Pure Strategies
                     I N players with i 2 I;
                     I s 2 S                                   S pure strategy pro…le, s 2 S ;
                                                     ∏ i                                                                     i           i
                                                 i =1,..,N
                     I u (s) payo¤;
                              i
                     I G  hI,fS g ,fu (s)g i strategic formof …nite game with
                                                     i    i          i             i
                           pure strategy.