Credit

4.00   (L-T-P:   3-1-0)

Department / Center / School / Unit

Economics

Course Objectives

One part of this course aims to introduce the students to the set-up of general equilibrium model especially following Arrow-Debreu framework. Existence, stability and other properties of such equilibria are formally discussed. The other part of the course aims to introduce the students to game theory. Basic model of complete information simultaneous move games is set up and the notion of Nash equilibrium is introduced. Properties of Nash equilibrium are discussed in details, particularly with the help of several examples. Next the concept of sequential games is introduced and examples are used to define the notion of subgame perfect equilibrium in this setting.

Course Contents

Arrow-Debreu framework is established and equilibrium notion is introduced. Existence properties are discussed and formally proved. Stability of the equilibria is discussed and the conditions are introduced. Uniqueness is discussed next. In game theory, we start by introducing the basic set-up of a complete information simultaneous move game. The concept of Nash equilibrium is formally discussed. The existence of Nash equilibrium is proved and the related conditions are introduced. The assumption of complete information is relaxed next and Bayes Nash equilibrium is introduced. The sequential game concept if defined next and the appropriate notion of equilibrium is discussed. Several examples from market structures, auctions, voting etc. are used to motivate the notions and explain the concepts.

Suggested References

1. Kreps : A course in microeconomic theory, Princeton, 1990.
2. Mas-Colell, Whinston and Green : Microeconomic theory, Oxford, 1995.
3. Rubinstein, A: A Course in Game Theory, 2017.
4. Debreu, G: Theory of Value: Axiomatic Analysis. Of Economic Equilibrium. Cowles Foundation.