Introduction Signaling games are used to model the following situation: Player 1, the Sender, receives some private information and sends a message m E M to Player 2, the Receiver. The latter, in turn, observes m but not 0, and chooses response r E R. Players'payoffs depend on 0, m and r. What could be simpler? Yet, there is a huge number of economically interesting games that fit nicely within this framework: Spence's job market signaling model is the leading example, but applications abound in IO (limit pricing, disclosure...) finance (security design) and political economics

Introduction These notes essentially tie up a few loose ends in Lecture 8; in particular, I exhibit examples of inefficiencies in first- and second-price auctions. I would also like to briefly comment on Questions 1 and 2 in Problem Set 2 The first-price auction may be inefficient even with private values Both examples I am going to show are due to Eric Maskin(to the best of my knowledge) The first point I wish to make is that, even in a private-values setting, asymmetries may

Introduction This lecture presents the two main contributions of \interactive epistemology\to thethe- ory of normal-form games: a characterization of Nash equilibrium beliefs, and a full (i.e behavioral) characterization of rationalizability a review of the basic definitions For your convenience, I summarize the essential definitions pertaining to models of interactive

Introduction This lecture continues our analysis of games with payoff uncertainty. The three main objec- tives are: (1) to illustrate the flexibility of the Harsanyi framework (or our version thereof); (2)to highlight the assumptions implicit in the conventional usage of the framework, and the possible departures; (3) to discuss its potential problems, as well as some solutions to the latter

Introduction This lecture continues the analysis of normal-form games. We analyze general, non-zerosum games, emphasizing the informal\equation\: Rational Behavior+ Assumptions about Beliefs=Solution Concepts Before we tackle the new material, let us review what we have learned about zerosum

Introduction The theory of extensive games is built upon a key notion, that of sequential rationality, and a key insight, the centrality of off-equilibrium beliefs. The definition of sequential equilibrium brings both to the fore in a straightforward manner, and emphasizes their interrelation

Introduction [Again, by and large, I will follow OR, Chap. 8, so I will keep these notes to a minimum. Review of key definitions Recall our three payoff aggregation criteria: discounting, i.e (u2)≥1>(2 (also recall that the payoff profile corresponding to a stream (ut)is taken to be(1 8)2t18t-u(a)); limit of means

Introduction The notion of subgame perfection is the cornerstone of the theory of extensive games. It embodies its key intuitions-and provides a vivid example of the difficulties inherent in such a theor But, above all, it has proved to be extremely profitable in a variety of applications. More- over, it has spawned a huge theoretical literature which has attempted(often successfully

Goal of the Firm 1) Profit Maximization? this goal ignores: a) TIMING of Returns (Time Value of Money Ch. 5) b) UNCERTAINTY of Returns (Risk- Ch. 6)

ourse topics Introduction Mathematical Background Rigid- Body Mechanics Robotic Kinematics Robotic dynamics