
- UCAS course code
- NR17
- UCAS institution code
- M20
Course unit details:
Mathematical Economics II
Unit code | ECON30290 |
---|---|
Credit rating | 20 |
Unit level | Level 3 |
Teaching period(s) | Full year |
Offered by | Economics |
Available as a free choice unit? | Yes |
Overview
Pre/co-requisites
Unit title | Unit code | Requirement type | Description |
---|---|---|---|
Mathematical Economics I | ECON20120 | Pre-Requisite | Compulsory |
Aims
The general aim of this course is to introduce students to the basic game-theoretic principles and techniques employed in economic modelling. The first semester part of the course reviews fundamental themes and concepts in game theory. The second semester part focuses on auctions and mechanism design.
Learning outcomes
- formalize real world situations in terms of either optimization problems or games;
- demonstrate the understanding of the main solution concepts in game theory;
- use in economic modelling various game-theoretic frameworks (static and dynamic games, games of complete information, Bayesian games, etc.);
- be familiar with the basic principles of evolutionary game theory and its applications in economics.
Syllabus
Semester 1. The focus of the 1st semester part of the course is on general concepts and frameworks of game theory in the context of mathematical economics. Topics include:
- Simultaneous move games and dynamic games with perfect information. Nash equilibrium and subgame perfect Nash equilibrium. Games with communication. Contracts, implementable allocations and correlated equilibria. The economic models of Cournot, Stackelberg, Bertrand, Hotelling, Bertrand-Edgeworth, the "Monopoly Union" model, and Rubinstein's bargaining model. Unbeatable strategies and determinacy.
- Two stage games with imperfect information and repeated games. Economic models of bank runs. Infinitely repeated games. The Folk Theorem.
- Incomplete information. Static Bayesian games. Bayesian Nash equilibrium. Cournot and Bertrand models with asymmetric information. Simplest models of auctions. Dynamic Bayesian games. Perfect Bayesian Nash equilibrium. Signalling models.
- Learning and fictitious play. Evolutionary game theory. Evolutionary stable strategies. Replicator dynamics. Evolutionary stable steady states.
Semester 2. The second semester part focuses on game-theoretic models for auctions and mechanism design.
We follow the book "Auction Theory" by V. Krishna. We cover:
• Auctions with Private Independent Values.
• Mechanism Design
- Applications.
Teaching and learning methods
Semester 1: 16 lectures, 4 exercise classes (within the lecture time slots) and 2 small-group tutorial/feedback meetings
Semester 2: Lectures and exercise classes.
Employability skills
- Other
- Mathematical modelling and quantitative methods in economics underpin both advanced research and effective policy. To understand social dynamics, economic behaviour and the effects of social interventions researchers and practitioners have to be able to deploy a broad range of analytic skills. The course develops skills of this kind and thereby helps preparing the students for a future career in the realms of economics and finance.
Assessment methods
Semester One
45% Exam
2.5% Take Home Test 1
2.5% Take Home Test 2
Semester Two
40% Exam
10% Assignments
Feedback methods
Semester 1:
• Students can get feedback and revision support at tutorial/feedback meetings and weekly office hours.
Semester 2:
• Tutorial feedback.
• Office hours.
• Mock Exam
Recommended reading
Semester 1:
• R. Gibbons, “A Primer in Game Theory”, 1992.
• M. Maschler, E. Solan, and S. Zamir, “Game Theory”, Cambridge University Press, 2013.
This reading is supplementary to the lectures and is optional. The 1st Semester part of the module is self-contained, and no external texts or resources are required to fulfil its objectives. Electronic pdf copies of all course materials (lecture notes/slides, exercises and answers) will be posted to the web during the semester. They are sufficient for studying and revising the course.
Semester 2:
• V Krishna, "Auction Theory" (2002). Textbook.
• M. Maschler, E. Solan, and S. Zamir, “Game Theory”, Cambridge University Press, 2013.
• K Sydsaeter et al, "Essential Mathematics for Economic Analysis" (FT Press, 2008).
• K Sydsaeter et al, "Further Mathematics for Economic Analysis" (FT Press, 2008).
The textbook by V. Krishna is an essential reading material for the 2nd Semester part of the course. Short lecture summaries will be supplied after each lecture, but they shouldn’t and cannot replace thorough reading, preparation for class and self work. The other books on the list are recommended, and fully sufficient, for revising the course and preparing the examination.
Study hours
Independent study hours | |
---|---|
Independent study | 0 |
Teaching staff
Staff member | Role |
---|---|
Igor Evstigneev | Unit coordinator |
Omer Idan | Unit coordinator |
Additional notes
For every 10 course unit credits we expect students to work for around 100 hours. This time generally includes any contact times (online or face to face, recorded and live), but also independent study, work for coursework, and group work. This amount is only a guidance and individual study time will vary.