ECTS
2 credits
Component
Faculty of Science
Description
This course introduces the mathematical modeling of the behavior of actors seeking to optimize an individual objective in a competitive situation.
Objectives
Introduce the formalism of utility maximization for one actor, then two interacting actors. Establish the main optimality results and apply this formalism to the competitive economic context.
Necessary pre-requisites
Convex optimization course.
Recommended prerequisites: a good command of differential and integral calculus, as well as the solution of constrained optimization problems.
Syllabus
1.Introduction:
a) Evolution of the definition of economics
b) Brief presentation of the history of Game Theory.
Interaction between economic actors and elements of non-cooperative game theory :
a) Description of a game
a.1) Simultaneous and dynamic games
- Representation of a game in normal form
- Extensive form representation
a.2) Balance in dominant strategies.
a.3) Nash equilibrium
a.4) Example of the application of the model to the industrial economy: Duopoly à la Cournot and à la Bertrand.
b) Dynamic games
b.1)Refinement of the Nash equilibrium: perfect equilibrium in subgames and backward induction algorithm
b.2) Market entry games
3. Information theory: information asymmetry and incentives:
a) Principal-agent model
a.1) Information asymmetry: Akerlof's "Lemon" model
a.2) Market entry model in the presence of asymmetric cost information.
b) Incentives and mechanisms
b.1) Design of incentive mechanisms
b.2) Concretization in dominant strategy.
Additional information
Hourly volumes:
CM : 9
TD : 9
TP:
Terrain: