Behavioral Game Theory: Experiments in Strategic Interaction

Course Description

Game theory is used to understand human behavior. The course will start with the study of the basic concepts of game theory and then will move on to the study of decision making by real people who are not perfectly rational. The course will help students understand how people really interact with each other in daily life, using both economic theory and experiments in economics.

Standard game theory asks how rational geniuses play games, but has ignored, until recently, how average people with emotions and limited foresight actually play games. We will learn how emotions like altruism, jealousy, honesty, etc. affect behavior. This course introduces decision-making theories and related laboratory experiments in economics. We'll learn why and how economists use controlled experiments to learn about economic behavior.

The games we are going to study include the prisoner's dilemma, the beauty contest game, the public goods game, the bargaining experiments, and the auction games. An introduction of game theory will be covered. We will study behavioral theories and conduct experiments in class to see if we can validate these theories with the experimental data.

This course is mainly for students who are interested in economics, business, political science, and psychology. It provides an easy way to learn game theory, so students can have a basic understanding of economics. Also, it provides a thorough introduction to experimental economics, so students can start to perform their own research in this field.

By the end of this course, students will know or be able to do the following:

-Understand basic concepts of game theory, such as finding the Nash equilibrium in simultaneous--move games and sequential--move games.
-Apply the concepts of game theory to understand the behavior of 'real' people.
-Learn the basics of experimental economics and understand how the experimental results affirm (or differ from) predictions of economic theory.

Prerequisites: Basic math knowledge is recommended.