311707 Microeconomics 2 (2a and 2b) (V) (SoSe 2026)

The aim of this course is to provide a deep understanding of game theory without requiring much previous knowledge (except basic knowledge of graduate level Microeconomics). Students will learn to (i) model any situation of strategic interaction formally as a game, (ii) act well themselves in situations of strategic interaction, and (iii) appreciate and analyze the consequences of strategic behavior of others in any setting (with a focus in this module on economic problems).

Microeconomics 2A: Game Theory

Basic elements of noncooperative games: what is a game, extensive form representation of a game, strategies and the normal form representation of a game, randomized choice.
Simultaneous-move games: dominant and dominated strategies, rationalizable strategies, CURB sets, Nash equilibrium, trembling hand perfect equilibrium, proper equilibrium, strategic stability, evolutionary stable strategies.
Dynamic games: extensive form rationalizability, sequential rationality, backward induction, subgame perfection, beliefs and sequential rationality, (weak) perfect Bayesian equilibrium, sequential equilibrium, reasonable beliefs and forward induction.
Games of incomplete information and Bayesian Nash equilibrium.

Microeconomics 2B: Economics of Information

Competition among firms: Bertrand, Cournot, repeated interaction and the folk theorem.
Interaction with asymmetric information: Adverse selection, moral hazard, and signalling.
Auctions with private valuations: Revenue Equivalence and equilibrium characterization.
Mechanism Design: revelation principle, general revenue equivalence, seller optimal mechanisms, efficient mechanisms (Vickery-Clarke-Groves).

There will be a tutorial as well as plenty of occasions for you to ask questions and discuss problems.

Requirements for participation, required level

Microeconomics 1 (1a and 1b) are recommended.

Bibliography

Mas-Colell, A., Whinston, M.D., Green, J., Microeconomic Theory, Oxford University Press, 1995. Chapters 7-9, 13, 14, and 23.
Fudenberg, D., and Tirole, J., Game Theory, MIT Press, 1991, Chapters 1-3,5-8,11.
Ritzberger, K., Foundations of Non-Cooperative Game Theory, Oxford University Press, 2002, Chapters 4-6.
Krishna, V., Auction Theory, 2nd edition, Academic Press, 2010, Chapters 1-5.