Applications of Game Theory

Why do people cooperate when cheating pays?

Why do firms sometimes fight price wars—and sometimes collude?
When should you move first, wait, bluff, or stay silent?

If you enjoy thinking strategically about conflict, cooperation, incentives, and information, Applications of Game Theory will change the way you see the world.

Game theory is the language economists use to analyze strategic interaction—situations in which your outcome depends not only on what you do, but on what others do, believe, and expect you to do. From markets and negotiations to politics, war, auctions, and social norms, strategic thinking is everywhere.

This course introduces you to the most powerful ideas of modern game theory and shows how they are used to understand real economic and social problems. Along the way, you will actively play games, solve puzzles, and learn how simple strategic models can generate deep and sometimes surprising insights about human behavior.

What Is This Course About?

The course combines core theory, hands-on strategic reasoning, and real-world applications. It is rigorous, but designed to be accessible to undergraduates with basic microeconomics and mathematics.

You will learn how economists model strategic situations—and how to think strategically yourself.

What Kinds of Questions Will We Study?

Strategic Foundations

●  What is a Nash equilibrium—and when does it predict real behavior?

●  Why do rational players sometimes end up in inefficient outcomes?

●  How do mixed strategies work in games like rock-paper-scissors or matching pennies?

Dynamic Strategy and Commitment

●  How do reputations form, and why do they matter?

●  When is it optimal to move first—and when should you wait?

●  How do bargaining and negotiation outcomes depend on timing and credibility?

●  Why do wars of attrition occur, and how do they end?

●  Why might employers under-invest in your skills (the hold-up problem)?

Information, Incentives, and Markets

●  How do people signal their quality to employers, investors, or customers?

●  How do auctions work—and why do winners sometimes regret winning?

●  How does information get aggregated in markets, juries, or crowds?

●  How can institutions and mechanisms be designed to align incentives?

These questions are studied using famous models and applications from economics, finance, political economy, and beyond.

How Will You Learn?

This is an interactive and applied course.

●  You will play games in class—with and against your classmates—to experience strategic dilemmas firsthand.

●  Lectures focus on intuition, clear logic, and economic interpretation.

●  Problem sets help you practice formal reasoning and prepare for exams.

●  Discussions connect theory to real-world behavior and evidence.

The emphasis is not just on solving games, but on understanding why strategic outcomes look the way they do.

What Skills Will You Gain?

By the end of the course, you will be able to:

●  Think clearly and strategically about interactive decision problems

●  Translate real situations into formal game-theoretic models

●  Analyze bargaining, competition, cooperation, and signaling problems

●  Communicate strategic reasoning precisely and convincingly

These skills are highly valuable in economics, finance, consulting, public policy, law, and any field involving negotiation, incentives, or strategic interaction.

Who Can Take This Course?

No prior course in game theory is required beyond introductory microeconomics and basic mathematics.