• 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.

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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.

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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.

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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.

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Additional information

Hourly volumes:

            CM : 9

            TD : 9

            TP: 

            Terrain:

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