APPLICATION FORM FOR

H3 COURSE GAME THEORY AND COMPETITION JANUARY 2012 INTAKE

FOR A-LEVELS ECONOMICS

Deadline for Application : Friday 28 October 2011

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Please indicate your preferred day for the H3 course with a tick ().
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Wednesdays 2.00pm 4.45pm

Wednesdays 4.45pm 7.30pm

Fridays 2.00pm 5.00pm

Saturdays 8.00am 11.00 am

OR
[
OR
[
OR
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Please submit your completed Application Form together with a copy of your JC1 Promotional Examination
Results Slip and your O-levels Certificate by the abovementioned deadline to your H3 teacher-in-charge in your
junior college, and they will pass your application form to us.

HIGHER 3 PROGRAMME FOR A LEVEL ECONOMICS

ECON 106Z GAME THEORY AND COMPETITION
January 2012
Instructor Professor Winston T H Koh
Office: #050-033
School of Economics
90 Stamford Road
Tel: 6828-0853
Email: winstonkoh@smu.edu.sg

Course Objectives
Economic agents with divergent objectives and interests often compete against one another in a variety of
situations. For instance, companies compete for customers and production rights, countries compete for
foreign investments and over trade quotas, co-workers compete for promotions, graduates compete for
jobs and contestants on game shows compete for prize money. These agents may have identical or
different strategic options open to them and may possess common information and/or private knowledge
that could place them at an advantage relative to their rivals.
This H3 course builds on the H2 Economics Syllabus for Economics: specifically, Section 1.3 Firms and
How They Operate.
The course will introduce students to basic concepts and principles of game theory, with applications to
market competition, business and other aspects of economic life. Students will learn the application of a
game-theoretic framework to analyze market competition and resource allocation that are directly relevant
to the H2 Economics syllabus. Furthermore, they will be able to use the concepts of prisoners dilemma,
Nash equilibrium and mixed strategies to analyze a wide range of economic problems.
This course introduces the students to basic concepts and principles of game theory, with applications to
business, politics and social sciences. The course stresses conceptual understanding and problem
solving, and will equip students with a better appreciation of the strategic interactions present in different
types of economic activities.

Course Structure

Class-room sessions: 12 lessons starting in January 2012. There will be 4 classes: Wednesday (2.00
pm to 4.45 pm, and 4.45 pm to 7.30 pm), Friday (2.00 pm to 5.00 pm), and Saturday (8.00 am to 11.00
am).

Assignments and independent study: There will be weekly homework and readings assigned to
students for independent study. Students may consult the professor and the teaching assistant to
review the material taught in class.

Mid-term test: It will be a closed-book test, 2.5 hours in duration, 3 multi-part questions, with structured
problems and free-response questions.

Final Examination: A closed book written examination (3 hours). It will consist of structured problems
and free-response questions.
Assessment & Evaluation
Class participation 5%
Mid Term Test
Final examination 70%

25%

Required Text
Avinash K. Dixit and Susan Skeath, Games of Strategy, Third Edition, Norton, 2009
Other Readings and References
Avinash K. Dixit and Barry J. Nalebuff, Thinking Strategically, Norton, 1991
Eric Rasmusen, Games and Information: An Introduction to Game Theory, Basil Blackwell, 2007
Thomas C. Schelling, The Strategy of Conflict, Harvard University Press, 1980
Herbert Gintis, Game Theory Evolving, Princeton University Press, 2009
H. Scott Bierman and Luis Fernandez, Game Theory with Economic Applications, 2nd Edition, Addison
Wesley, 1998
Joel Watson, An Introduction to Game Theory, Norton, 2008
Robert Gibbons, Game Theory for Applied Economists, Princeton, 1992
Note: All the supplementary references listed above will be made available at the Course Reserve
Section, in the SMU Library, for the duration of the course.

Course Outline and Schedule (Venue: Seminar Room 5.2, SOE/SOSS Building)
Topics
1

Strategic Thinking with game theory

What is a game of strategy?

Rules of the Game

Decisions versus tactics

Game with sequential moves

Drawing game trees

Backward Induction

Rollback equilibrium

Games with simultaneous moves

Nash equilibrium

Continuous variables

Games of dynamic competition

Combining sequential and simultaneous moves
Applications to business and politics

Simultaneous-move games with mixed strategies

Beliefs and Responses
Games with more than two strategies

The Prisoners Dilemma

Repeated interactions
Applications to Politics, Evolutionary Biology

Revision and Mid-term Test

Uncertainty and Information

Strategies to manipulate information
Screening versus signaling

Entry Deterrence under Asymmetric Information

Separating, Pooling and Semi-separating
Equilibrium

10

Games with strategic moves

Commitment, threats and promises:
Applications: US-Japan trade relations
Brinkmanship

11

Introduction to Auction Theory

Private-values auction model
Common-values auction model

12

Revision and Class Exercises

13

Final Examination

Dixit and Skeath

Ch 1, 2

Ch 3

Ch 4, 5

Ch 6

Ch 7, 8

Ch 11

Ch 9

Ch 9

Ch 10, 14

Ch 16