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Games, Information and Markets (ECO-AD-GAMESINFO)

ECO-AD-GAMESINFO

Purpose

1. Syllabus and Reading List for “Games, Information and Markets”

1.1. Summary.
This course will cover topics in information economics and game theory. Emphasis will be on the applications to how markets function. We will start with Dynamic Games, reputation (Day 1) and collusion (Day 2), then move to information aggregation in markets (Common value auctions, Day 3), information aggregation in elections (Day 4) and finally communication and information (Day 5). I am not very optimistic that by the beginning of Day 5, we will have covered all the previous material, so Day 5 is more flexible. I will send a more detailed reading list at least two weeks before the class starts.

Grading will be based on 2 take-home homeworks. The first homework will be delivered on the first class and will be due on Thursday, and the second homework will be delivered on Thursday and will be due Monday of the following week.

Topics, readings, and papers

Day 1: Repeated games and reputations.
(i) The chain-store paradox and reputation in finitely repeated games (From Mailath and Samuelson (2006))
(ii) Reputation in infinitely repeated games under perfect monitoring (Fudenberg and Levine (1989))

Day 2: Collusion.
(i) Noncooperative collusion under imperfect price information (Green and Porter (1984))
(ii) A supergame-theoretic model of price wars during booms (Rotemberg and Saloner (1986))

Day 3: Large Auctions and Information Aggregation.
(i) A convergence theorem for competitive bidding (Milgrom (1979))
(ii) A theory of auctions and competitive bidding (Milgrom and Weber (1982))
(iii) The loser’s curse and information aggregation in common value auctions (Pesendorfer and Swinkels (1997))
(iv) Auction theory, appendices C and D (Krishna (2009))
(v) Auctions, actions, and the failure of information aggregation (Atakan and Ekmekci (2014))
(vi) Information aggregation in common value auctions (Kremer (2002))
(vii) Market selection and the information content of prices (Atakan and Ekmekci (2021))

Day 4: Condorcet Jury Theorems and Information Aggregation in Elections.
(i) Information aggregation, rationality, and the Condorcet jury theorem (Austen-Smith and Banks (1996))
(ii) Voting behavior and information aggregation in elections with private information (Feddersen
and Pesendorfer (1997))
(iii) Extended Poisson games and the Condorcet jury theorem (?)
(iv) Manipulated Electorates and Information Aggregation (Ekmekci and Lauermann (2014))
(v) Convicting the innocent: The inferiority of unanimous jury verdicts under strategic voting (Feddersen and Pesendorfer (1998))
(vi) Information aggregation in Poisson-elections (Ekmekci and Lauermann (2022))

Day 5: Communication.
(1) Job Market Signaling (Spence (1978))
(2) Strategic Information Transmission (Crawford and Sobel (1982))
(3) Bayesian Persuasion (Kamenica and Gentzkow (2011))
(4) Public protests and policy making (Battaglini (2017))
(5) Informal elections with dispersed information (Ekmekci et al. (2019))

References
Atakan, A. E. and M. Ekmekci (2014): “Auctions, Actions, and the Failure of Information Aggregation,” The American Economic Review, 104. ——— (2021): “Market selection and the information content of prices,” Econometrica, 89, 2049–2079.
Austen-Smith, D. and J. S. Banks (1996): “Information aggregation, rationality, and the Condorcet jury theorem,” American Political Science Review, 90, 34–45.
Battaglini, M. (2017): “Public protests and policy making,” The Quarterly Journal of Economics, 132, 485–549.
Crawford, V. P. and J. Sobel (1982): “Strategic information transmission,” Econometrica: Journal of the Econometric Society, 1431–1451.

Ekmekci, M. and S. Lauermann (2014): “Manipulated Electorates and Information Aggregation,”. ——— (2022): “Information aggregation in Poisson elections,” Theoretical Economics, 17, 1–23.
Ekmekci, M., S. Lauermann, et al. (2019): “Informal elections with dispersed information,”No. crctr224 2019 080. Germany: University of Bonn and University of Mannheim.
Feddersen, T. and W. Pesendorfer (1997): “Voting behavior and information aggregation in elections with private information,” Econometrica: Journal of the Econometric Society, 1029–1058. ——— (1998): “Convicting the innocent: The inferiority of unanimous jury verdicts under strategic voting,” American Political science review, 92, 23–35.
Fudenberg, D. and D. Levine (1989): “Reputation and equilibrium selection in games with a patient player,” Econometrica, 57, 759–778.
Green, E. J. and R. H. Porter (1984): “Noncooperative collusion under imperfect price information,” Econometrica: Journal of the Econometric Society, 87–100.
Kamenica, E. and M. Gentzkow (2011): “Bayesian persuasion,” American Economic Review, 101, 2590–2615.
Kremer, I. (2002): “Information aggregation in common value auctions,” Econometrica, 70, 1675– 1682.
Krishna, V. (2009): Auction theory, Academic press. Mailath, G. and L. Samuelson (2006): Repeated games and reputations: long-run relationships.
Milgrom, P. (1979): “A convergence theorem for competitive bidding with differential information,” Econometrica, 679–688.
Milgrom, P. and R. Weber (1982): “A theory of auctions and competitive bidding,” Econometrica, 50, 1089–1122.
Pesendorfer, W. and J. Swinkels (1997): “The loser’s curse and information aggregation in common value auctions,” Econometrica, 65, 1247–1281.
Rotemberg, J. J. and G. Saloner (1986): “A supergame-theoretic model of price wars during booms,” The American economic review, 76, 390–407.
Spence, M. (1978): “Job market signaling,” in Uncertainty in economics, Elsevier, 281–306.

ENROL FOR THIS COURSE