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Advanced Microeconomics Advanced Microeconomics ECON5200 - Fall 2014 Advanced Microeconomics Introduction I What you have done: - consumers maximize their utility subject to budget constraints and rms maximize their pro ts given technology and market prices; - no strategic behavior. I What we will do: - in many interesting situations, agentsoptimal behavior depends on the other agentsbehavior; - strategic behavior. I Game theory provides a language to analyze such strategic situations; I Countless number of examples! Auctions, Bargaining, Price competition, Civil Conicts... Advanced Microeconomics Introduction Road map I Static Game: 1. With Complete Information (I); 2. With Incomplete Information (II). I Dynamic Game: 1. With Complete Information (II-III); 2. With Incomplete Information (III). Advanced Microeconomics Strategic Games with Complete Information Strategic Game with Pure Strategies I N players with i 2 I; I s 2 S S pure strategy pro le, s 2 S ; ∏ i i i i =1,..,N I u (s) payo¤; i I G hI,fS g ,fu (s)g i strategic formof nite game with i i i i pure strategy.
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