ECON 3503 - Game Theory III

North Terrace Campus - Semester 2 - 2014

This course provides an introduction to Game Theory. Game Theory is a mathematical framework which makes possible the analysis of the decision making process of interdependent subjects. It is aimed at explaining and predicting how individuals behave in a specific strategic situation, and therefore help improve decision making. A situation is strategic if the outcome of a decision problem depends on the choices of more than one person. Most decision problems in real life are strategic. The course will explain in depth the standard equilibrium concepts (such as Nash Equilibrium, Subgame-Perfect Nash Equilibrium, and others) in Game Theory. To illustrate the concepts, real-world examples, case studies, and classroom experiments might be used.

  • General Course Information
    Course Details
    Course Code ECON 3503
    Course Game Theory III
    Coordinating Unit Economics
    Term Semester 2
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Incompatible ECON 3016
    Assumed Knowledge ECON 2503
    Assessment Typically assignments, mid-semester exam, final exam and participation.
    Course Staff

    Course Coordinator: Associate Professor Virginie Masson

    Office hours: Tuesdays 4pm - 5pm

    Office location: Nexus 10, Level 4, Room 4.08

    Telephone: 8313 4930

    Preferred method of contact: email. Please do not call unless absolutely necessary.
    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.


    Thursdays, 3-5pm, Lower Napier LG28


    Tuesdays, 2-3pm, Hughes 309
  • Learning Outcomes
    Course Learning Outcomes
    On successful completion of this course students will be able to:

    1 Identify strategic situations and represent them as games
    2 Solve simple games using various techniques
    3 Analyse economic situations using game theoretic techniques
    4 Recommend and prescribe which strategies to implement
    5 Understand better the mathematics involved in game theory
    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1, 2, 3, 4, 5
    The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 3, 4
    An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. 2, 3, 4
    Skills of a high order in interpersonal understanding, teamwork and communication. 3, 4
    A proficiency in the appropriate use of contemporary technologies. 3, 4
    A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. 3
  • Learning Resources
    Required Resources

    Strategy: An Introduction to Game Theory, by Joel Watson, W. W.Norton & Company, 3rd edition
    Recommended Resources

    An Introduction to Game Theory, by Martin J. Osborne, Oxford University Press, USA (August 1, 2003)

    Games of Strategy, Second Edition, by Avinash K. Dixit and Susan Skeath, W. W. Norton & Company; 2 edition (April 2004)

    Online Learning

    This course uses MyUni intensively and you are required to check the website regularly. 

    Course material such as lectures notes, assignments, assignment answer guides and supplementary material for developing your mathematical skills are available under MyUni. Also, a discussion board will be available for questions you may want to ask your lecturer or fellow classmates.

    There will be NO LECTURE RECORDINGS. Game theory is best learnt through practice and hence, your attendance to and participation in lectures and workshops is mandatory.

  • Learning & Teaching Activities
    Learning & Teaching Modes

    The lectures will provide you with the necessary understanding of the material to be able to solve the exercises you will be given for assignments or exams. Examples will be used to illustrate the concepts presented in this course.

    Exercises to be prepared for the workshop will be posted online a week before. You are required to prepare ALL the exercises. During the workshop, some students will be asked to come to the board and present their work. Your lecturer will provide assistance if needed and questions from other students are strongly encouraged. This system works on a voluntary basis. However, in the absence of any volunteer, your lecturer reserves the right to terminate the workshop early. These workshops are aimed to guide you with the preparation of your assignments, not spoon-feed you answers.


    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies.

    This translates to 12 hours per week for a semester course.
    Learning Activities Summary
    Week Title Chapter
    1 Introduction - Extensive Form - Strategies and The Normal Form Chapters 1-3
    2 Beliefs, Mixed Strategies, and Expected Payoffs - General Assumptions & Methodology Chapters 4-5
    3 Dominance and Best response - Rationalizability & Iterated Dominance Chapters 6-7
    4 Nash Equilibrium - Oligopoly, Tariffs, Crime & Voting Chapters 9-10
    5 Mixed-Strategy Nash Equilibrium – Strictly Competitive Games & Security Strategies Chapters 11-12
    6 Details of the Extensive Form - Backward Induction and Subgame Perfection Chapters 14-15
    7 Repeated Games, Reputation, Random Events and Incomplete Information Chapters 22-24
    8 Class Test Review (Tuesday) and Class Test (Thursday)
    Mid Semester Break
    9 Bayesian Nash Equilibrium, Rationalizability, Lemons, Auctions & Information Aggregation  Chapters 26-27
    10 Perfect Bayesian Equilibrium - Job Market Signaling & Reputation  Chapters 28-29
    11 Bargaining Problems - Analysis of Simple Bargaining Games Chapters 18-19
    12 Review for Final Exam


  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    Mid semester exam  (Week 8) - 20%                                                                               

    Date and time: Thursday 18 September – During lecture time, same location 

    This exam will assess the topics of Weeks 1 to 7.

    It will consist of mathematical problems and short answer questions. Past mid semester exam papers will be available on MyUni, for which no answers will be provided. You are however encouraged to talk about the past exams and their solutions on the discussion board or in my office hours.

    Workshop Participation - 10%


    You will be asked to prepare some exercises before going to your workshop. Please be aware that this preparation is important as it will improve your learning during the workshop and will
    contribute towards a dynamic environment where students and lecturer will interact more actively with one another. Workshop participation will be graded as described in the following “Assessment Details” section.

    Assignments - 10%


    Assignments are to be submitted on time. Some assignments may be group assignments.

    Quizzes - 10%


    Quizzes will be administered during lecture time.

    Final Exam - 50%

    There will be a 3 hour exam. The final exam is comprehensive, i.e. it can cover ALL the topics
    Assessment Related Requirements
    To gain a pass, a mark of at least 45% must be obtained on the final examination as well as
    a total of at least 50% overall.
    Assessment Detail

    Important Notes on Assessments:

    1 - Failure to sit the midterm examination will result in receiving zero points, whether a medical certificate is provided or not. The grade of the final examination will then account for 70% of the overall grade.

    2 - The ‘workshop participation’ component of the assessment will be partly based on your attempt to answer an exercise on the board during the workshop. You will be allocated one of three possible grades, 1, 3 or 5, based on the quality of your answer. You may volunteer multiple times, and have the opportunity to improve your grade for this component throughout the semester. However if you already have a grade for this, you will only be permitted to volunteer for a question if there are no other volunteers who haven’t yet received a mark for participation. The other 5% of this component will reflect your active participation. Obviously, it will be correlated with your attendance as it is not possible to actively participate if you are not present.

    3 - You will be eligible for the participation grade if and only if the lecturer has recorded that you have volunteered to provide a SATISFACTORY answer to the class for at least one of the weekly assignment questions during the course. Please see your lecturer if you have any concerns.

    4 - Your quiz average will be based on your best 6 quizzes (out of 9) for  the semester. No replacement quizzes will be provided.

    5 - If you are unable to attend workshops, lectures or hand in your assignments for some medical reasons, you have to provide a medical certificate. If the medical certificate covers a period longer than a week, you will need to organise some other arrangements with the lecturer. The same applies if you provide more than two medical certificates during the semester.

    6 – If you are unable to attend workshops, lectures or hand in your assignments for any other reasons, you MUST contact your lecturer so that suitable alternative arrangements can be found.

    7 - Legible hand-writing and the quality of English expression are considered to be integral parts of the assessment process. Marks may be deducted in the final examination because of poor hand-writing.

    8 – If no students have prepared the workshop exercises and no students volunteer for answering an exercise, the lecturer reserves the right to shorten the workshop.

    9 - Assessment marks prior to the final exam may be displayed on the course website. Students are encouraged to check their marks and notify the lecturer of any discrepancies.


    1 - No late assignments accepted. Exceptional circumstances will be evaluated by your lecturer on a case-by-case basis and should be discussed whenever possible at least 48 hours before the due date. Failure to hand in an assignment on time will lead to a zero mark.

    2 – Assignments must be handed in at the Professions Student Support Hub, located at Nexus 10 (corner Pultney Street and North Terrace). No assignment will be collected by your lecturer.

    3 – Each assignment should be accompanied by a cover sheet, available at the hub.

    4 – Assignments will be handed back during workshop times. If you were not present during that time, please email your lecturer to arrange the collection of your assignment. The last assignment will be available for collection at the hub only.

    5 – Assignments due dates:

    Assignment 1 7 August @ 2pm
    Assignment 2 14 August @ 2pm
    Assignment 3 21 August @ 2pm
    Assignment 4 28 August @ 2pm
    Assignment 5 4 September @ 2pm
    Assignment 6 11 September @ 2pm
    Assignment 7 9 October @ 2pm
    Assignment 8 16 October @ 2pm
    Assignment 9 23 October @ 2pm
    Assignment 10 30 October @ 2pm
    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy ( course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

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