<center><H1> Tentative Contents of the Reader for Games and Information: An Introduction to Game Theory

Tentative Contents of the Reader for Games and Information: An Introduction to Game Theory

(January 10, 1999)

Readings Packet I
Chapter 1-8, Rules of the Game thru Adverse Selection,
G601: Applied Microeconomics, Spring 1999

I'd like to add more of my own notes on articles than is usual in edited volumes. At the very least, I would have a paragraph on each entry saying why I think it is worth including.

A star (*) indicates that I have a computer file.

An at-sign (@) indicates that the reading will probably not be in the Blackwell reader.

Many of the articles have incomplete references or are absent from this course packet. Also, many of them have notations next to them for my use in putting together a book of readings that will appear in 2000. Comments are welcomed on what ought to be included in this book.

  1. CHAPTER 1: THE RULES OF THE GAME.

    1. *Passell, Peter, ``Game Theory Captures a Nobel,'' New York Times . October 12, 1994, p. D1. TEXT FILE.

    2. *"Game Theory Basics", Nov. 2, 1996.

    3. Straffin, Philip (1980) ``The Prisoner's Dilemma'' UMAP Journal. 1: 101-3.

    4. Tucker, Albert (1950) ``A Two-Person Dilemma'', May 1950 notes.

    5. Nash, John (1950) ``Equilibrium Points in n-Person Games'' Proceedings of the National Academy of Sciences, USA. January 1950. 36: 48-9.

    6. * "To Ensure High Prices, Some Haulers Have Been Known to Break the Rules," Jeff Bailey, Wall Street Journal, November 8, 1993, p. A6. (P.D.).

    7. * Nash, John (1951) ``Non-Cooperative Games,'' Annals of Mathematics, (September 1951) 54: 286-95.PDF

    8. Rapoport, Anatol & Melvin Guyer (1966) ``A Taxonomy of 2x2 Games'' General Systems, 11: 203-14.

    9. * "Cash Flow: `Pay to Play' Is Banned, But Muni-Bond Firms Keep the Game Going --- Giant Lilco Deal Finds Them Giving to Accounts Tied To D'Amato and Pataki --- Hiring the Well-Connected," ," Charles Gasparino and Josh Hamilton, Wall Street Journal, May 13, 1998, p. A1 (Prisoner's Dilemma). HTML.

  2. CHAPTER 2: INFORMATION

    1. Ratbert the Consultant cartoon, United Features Syndicate, 1997.

    2. Milgrom, Paul and John Roberts (1986) ``Relying on the Information of Interested Parties,'' Rand Journal of Economics , Spring 1986, 17: 18-32.

    3. Livy on the Horatii, I.234. 4pp. Incomplete info. MISSING.

  3. CHAPTER 3: MIXED STRATEGIES

    1. Waldegrave, James (1713) ``Excerpt from a Letter'' (with a preface by Harold Kuhn). From Baumol \& Goldfeld (1968). MISSING.

    2. Fisher, R.A. (1934) "Randomization, and an Old Enigma of Card Play," The Mathematical Gazette, FINISH CITE.

    3. *"Notes on the Ransom Game," January 27, 1997. 3 pp.

    4. "Very Guilty" cartoon, Herman Unger, Universal Press Syndicate, 1988.

    5. *``Shipping Price-Fixing Pacts Hurt Consumers, Critics Say,'' Wall Street Journal, Anna Mathews, October 7, 1997. On legal cartels. DOC FILE.

    6. *Salant, Stephen, Sheldon Switzer & Robert Reynolds (1983) ``Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium,'' Quarterly Journal of Economics. (May 1983) 98: 185-99. PDF .

  4. CHAPTER 4: DYNAMIC GAMES

    1. @von Zermelo, E. (1913) ``Uber eine Anwendung der Mengenlehre auf die Theorie des Schachspiels,'' Proceedings, Fifth International Congress of Mathematicians. 1913. 2: 501-4.

    2. * von Zermelo, E. (1913) ``An Application of Set Theory on the Theory About the Game of Chess,'' Proceedings, Fifth International Congress of Mathematicians. 1913. 2: 501-4. TRANSLATOR?. TEXT FILE.

    3. Schelling, Thomas (1960) Chapter 5 of The Strategy of Conflict. Cambridge, Mass.: Harvard University Press, 1960.

    4. Farrell, Joseph and Drew Fudenberg (1981) "A Simple Model of Destructive Competition," mimeo, MIT, March 1981.

    5. Cooter, R. and Rubinfeld, D. 1989. "Economic analysis of legal disputes and their resolution". Journal of Economic Literature 27: 1067-1097. NOT IN PACKET.

    6. Bebchuk, L. 1996. "A new theory concerning the credibility and success of threats to sue" Journal of Legal Studies 25: 1-26.NOT IN PACKET.

    7. *``Art Thief Displays True Colors In Bargaining for Leniency,'' ( Wall Street Journal, Sept. 29, 1997) TEXT FILE.

  5. CHAPTER 5: REPEATED GAMES

    1. *Barro, Robert, DATE "This Tax Amnesty WIll Only Work Once", Wall Street Journal, CITE.

    2. *"Truth or Consequences? Hardly," Reed Abelson, The New York Times, June 23, 1996, p. 3.1. TXT.

    3. Hofstadter, Douglas (1983) ``Computer Tournaments of the Prisoner's Dilemma Suggest how Cooperation Evolves'' Scientific American. May 1983. 248: 16-26.

    4. Axelrod, Robert \& William Hamilton (1981) ``The Evolution of Cooperation,'' Science. March 1981. 211, 4489: 1390-96.

    5. *"The common pool problem. Simulation. Fish," November 18, 1998. TXT.

    6. Kreps, D., Milgrom, P., Roberts, J. and Wilson, R. 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory 27: 245-52. NOT IN PACKET.

    7. Rasmusen notes on proof in KMRW. NOT IN PACKET.

  6. CHAPTER 6: DYNAMIC GAMES WITH IMPERFECT INFORMATION

    1. Farrell, Joseph (1987) ``Cheap Talk, Coordination, and Entry,'' Rand Journal of Economics 18: 34-39.

    2. Van Damme, Eric (1989) ``Stable Equilibria and Forward Induction'' Journal of Economic Theory . August 1989. 48: 476-496.

    3. Excerpt from Pileggi, Wise Guy, on a gangster whose accomplices are unsure about whether he is going to turn them in. NOT IN PACKET.

  7. CHAPTER 7: MORAL HAZARD

    1. * "Notes on the Principal-Agent Problem," 1997. 3pp.

    2. Becker, Gary and George Stigler. 1974. ``Law Enforcement, Malfeasance, and the Compensation of Enforcers.'' 3 Journal of Legal Studies 1-18.

    4. Rubinstein, Ariel. 1979. ``An Optimal Conviction Expectation Regime for Offenses that May Have Been Committed by Accident,'' in Applied Game Theory , 406-413, Wurzburg: Physica-Verlag.

    5. * Adams v. Bullock , 227 N.Y. 208, 125 N.E. 93 (Court of Appeals of New York, 1919, Cardozo J.) . This is a tort case, talking about the efficient standard of care. 2pp. TXT.

    6. Keeble v. Hickeringill , 103 Eng. Rep. 1127, 11 East 574, (Queen's Bench 1707) . This is a tort case about unfair competition, good for pecuniary vs. real externalities. 2pp.

  8. CHAPTER 8: TOPICS IN MORAL HAZARD

    1. * "Bilateral Trading I: The Double Auction," March 11, 1997.TE.

    2. *"Notes on the Groves Mechanism," March 7, 1997. 3pp.

    3. Gonik, Jacob (1978) ``Tie Salesmen's Bonuses to their Forecasts, '' Harvard Business Review, (May/June 1978) 56: 116-23.

    4. * Adam Smith, Wealth of Nations, efficiency and inconstant wages, Wages and Profit, p. 207. 2 pp. TXT.

    5. *Associated Press, "Nobel Winners of 1996". TEXT FILE.

    6. *"Examples of Plea Bargains". Excerpted from " Mezzanatto and the Economics of Self Incrimination," Cardozo Law Review, 1998. TEXT FILE.

    7. *Shapiro, Carl and Joseph Stiglitz. 1984. ``Equilibrium Unemployment as a Worker Discipline Device.'' 74 American Economic Review 433-444. PDF .

    8. *``Andersen Consulting Unit Becomes a Rival for Power,'' Wall Street Journal, Joseph White and Elizabeth Macdonald, April 23, 1997. TXT.

    9. *``Arthur Andersen Wants to Keep Name, Get $10 Billion in Split With Consultant,'' Wall Street Journal, Joseph White, January 20, 1998. HTML.

    10. *``Divorce Petition: How Ugly is the Split of the Andersens?'' Wall Street Journal, Joseph White and Elizabeth Macdonald, February 4, 1998, p. A1. HTML.

    11. *``Shift of Workers is an Added Sign of Firm's Split-- Andersen Worldwide Staff Seeks Out Jobs at Units as `Devolution' Occurs,'' Wall Street Journal, Elizabeth Macdonald, June 19, 1998, p. B7B. MISSING

    12. "Unions Say Auto Firms Use Interplant Rivalry to Raise Work Quotas," Dale Buss, Wall Street Journal, November 8, 1983, p. 1, 31, 2pp. (Contests). MISSING.

  9. CHAPTER 9: ADVERSE SELECTION
    1. *Akerlof, George (1970) ``The Market for Lemons: Quality Uncertainty and the Market Mechanism'' Quarterly Journal of Economics. August 1970. 84: 488-500. PDF FILE.

    2. Deneckere, Raymond and R. Preston McAfee (1996) ``Damaged Goods,'' Journal of Economics and Management Science , Summer 1996, 5: 149-174.

    3. *"Crimping the Product" November 24, 1996. 1p.

    4. "Bagehot, Walter" (pseudonym) (1971) ``The Only Game in Town,'' Financial Analysts Journal March/April 1971, 27: 12-22.

    5. "Frank's Neurosurgery" Gary Larson, Far Side cartoon ( adverse selection) 1p.

    6. * ``Are Advertisers Ready to Pay Their Viewers?'' Wall Street Journal, Bart Ziegler, November 14, 1996.

    Readings Packet II
    Chapter 9-15: Signalling thru Industrial Organization
    G601: Applied Microeconomics, Spring 1999

  10. CHAPTER 10: SIGNALLING

    1. "Some Fine Day, All This Will Be Yours," Alan Dunn cartoon.

    2. Fudenberg, Drew and Jean Tirole (1986) ``A Signal-Jamming Theory of Predation,'' RAND Journal of Economics . 17: 366-76. MISSING.

    3. * "Learn to Play the Earnings Game (And Wall Street Will Love You). The Pressure to Report Smooth, Ever Higher Earnings has Never been Fiercer. Your Don't Want to Miss the Consensus Estimate by a Penny-- and You Don't Have To," Fortune , Justin Fox, March 31, 1997, p. 76-XXX.

      TEXT FILE.

    4. "Clown" cartoon. MISSING.

  11. CHAPTER 11: BARGAINING

    1. *Nash, John. 1950. ``The Bargaining Problem.'' Econometrica 18:155-62. PDF FILE.

    2. * Rubinstein, Ariel (1982) ``Perfect Equilibrium in a Bargaining Model'' Econometrica, January 1982. 50: 97-109. PDF.

    3. *Rasmusen, Eric ``A Model of Negotiation, Not Bargaining,'' October 18, 1997. TEXT FILE

    4. Livy, "The Horatii and the Curiatii, Part I," < cite>The Early History of Rome, 1.23. A. Selincourt, translator (1960). 1p.

    5. Notes on a simplified proof for Rubinstein 1982. (Ask Sutton for this)MISSING.

    6. Myerson adn Satterthwaite. MISSING.

  12. CHAPTER 12: AUCTIONS

    1. Shubik, M. 1971. ``The dollar auction game: A paradox in noncooperative behavior and escalation'' Journal of Conflict Resolution 15: 109-11.

    2. ``Advertisement for Bids,'' Bloomington Herald Times, November 8, 1997, p. C4. An example of real world auction rules. 1p.

    3. Vickrey, William (1961) ``Counterspeculation, Auctions, and Competitive Sealed Tenders'' Journal of Finance. March 1961. 16: 8-37.

    4. "Revenge of the Nerds," The Economist , July 23, 1994, p. 70. On economists advising the U.S. FCC on the spectrum auction. 1p.

    5. * Federal Trade Commission v. Abbott Laboratories, 853 F. Supp. 526 (D.C. 1994). A dispute over an auction for infant formula.

    6. "Payment Terms Were Too Easy; Firms Bid More Than They Had," Wall Street Journal, Quentin Hardy and Bryan Gruley, August 1, 1997.

    7. *McAfee, R. Preston and John McMillan (1996) ``Analyzing the Airwaves Auction,'' Journal of Economic Perspectives, (Winter 1996) 10:159-xxx. HTM.

  13. CHAPTER 13. PRICING

    1. * Stigler, George (1961) "The Economics of Information," The Journal of Political Economy, (June 1961),69: 213-225. PDF.

    2. Salop, Steven & Joseph Stiglitz (1977) ``Bargains and Ripoffs; A Model of Monopolistically Competitive Price Dispersion,'' Review of Economic Studies, October 1977. 138: 493-510.

    3. *Hotelling, Harold (1929) ``Stability in Competition,'' The Economic Journal, (March 1929) 39: 41-57. PDF

    4. @ Tirole, Jean (1988) The Theory of Industrial Organization, ``Short-Run Price Competition,'' pp. 209-238.

    5. *"Capacity-Constrained Bertrand," undated.

    6. @ Bertrand, Joseph (1883) ``Rechercher sur la theorie mathematique de la richesse,'' Journal des Savants . September 1883. 48, 499-508.

    7. * Edgeworth, Francis (1922) "The Mathematical Economics of Professor Amoroso," The Economic Journal, (September 1922) 30: 400-407.

    8. * D'Aspremont, Claude, J. Gabszewicz, \& Jacques Thisse (1979) ``On Hotelling's `Stability of Competition', '' Econometrica, September 1979. 47: 1145-50.

    9. *Shaked, Avner (1982) ``Existence and Computation of Mixed Strategy Nash Equilibrium for 3-Firms Location Problem,'' Journal of Industrial Economics, (September/December 1982) 31: 93-6.PDF

    10. * "Kleit Oligopoly Game" November 3, 1998. TEX.

    11. *Stigler, George (1964) "A Theory of Oligopoly" The Journal of Political Economy, (Feb. 1964) 72: 44-61. PDF.

    12. *"Notes on the Bertrand Paradox 1997?"

  14. CHAPTER 14 ENTRY.

    1. *"Continental May Agree to Buy Planes Exclusively From Boeing. Airline Wants Sole-Supplier Pact Similar to Ones Secured by Rivals," Wall Street Journal, Jeff Cole and Scott Mccartney, April 14, 1997. 3pp.

    2. * Bulow, Jeremy, John Geanakoplos & Paul Klemperer (1985) ``Multimarket Oligopoly: Strategic Substitutes and Complements'' Journal of Political Economy. June 1985. 93: 488-511.PDF

    3. *Haltiwanger, John & Michael Waldman (1991) ``Responders versus Nonresponders: A New Perspective of Heterogeneity, '' The Economic Journal, (September 1991) 101: 1085-1102. PDF

    4. Besanko, David, David Dranove and Mark Shanley, ``Strategic Commitment and Competition,'' pp. 319-348 of The Economics of Strategy, New York: John Wiley and Sons, 1996.

    5. *"Notes on Strategic Complements and Substitutes," 1997?. 1p.

    6. *Fudenberg, Drew & Jean Tirole (1984) "The Fat-Cat Effect, The Puppy-Dog Ploy, and the Lean and Hungry Look,'' American Economic Review, 74: 361-66. (May 1984) PDF .

    7. Gelman, J. and S. Salop (1983) ``Judo Economics: Capacity Limitation and Coupon Competition,'' Bell Journal of Economics, 14: 315-25. MISSING.

  15. CHAPTER 15: ASSET SPECIFICITY AND CONTRACTING

    1. *"Hart and Moore Notes," April 28, 1998. TEX.

    2. Tirole, Jean (1988) The Theory of Industrial Organization, ``The Theory of the Firm,'' pp 15-61.

    3. J. Mark Ramseyer (1995) ``Public Choice'' Chicago Law and Economics Working Paper Series no. 34 (second series). Not asset specificity, but this is a good place for miscellaneous materials that we will cover if we have extra time.

    Readings Packet III
    Research Method
    G601: Applied Microeconomics, Spring 1999

  16. 81. MATHEMATICAL APPENDIX

    1. "Notes on Fixed-Point Theorems," Spring 1997.

    2. "Notes on Genericity," January 29, 1996.

    3. "I'd Like to See Them Wriggle..." Chon Day, cartoon.

    4. Rothschild, Michael and Joseph Stiglitz (1970) ``Increasing Risk I,'' Journal of Economic Theory , 2: 225-243.

    5. Emmanuel Petrakis and Eric Rasmusen, ``Defining the Mean-Preserving Spread: 3-pt versus 4-pt,'' in Decision Making Under Risk and Uncertainty: New Models and Empirical Findings , edited by John Geweke. Amsterdam: Kluwer, 1992. TEXT FILE

    6. "Notes on Discounting," August 31, 1994. 3pp.

    7. *"Notes on Present Discounted Value," October 12, 1998. 3pp. TEX.

  17. 82. BIOGRAPHY

    1. @* Varian, Hal (1997) "How to Build an Economic Model in Your Spare Time," June 11, 1997. Forthcoming in Passion and Craft: Economists at Work, edited by Michael Szenberg, University of Michigan Press, 1998. PDF.

    2. @ *Dixit, Avinash (1994) "My System of Work (Not!)," The American Economist (Spring 1994). Forthcoming in Passion and Craft: Economists at Work, edited by Michael Szenberg, University of Michigan Press, 1998. PDF.

    3. *Nasar, Sylvia, ``The Lost Years of a Nobel Laureate,'' New York Times . November 13, 1994, p. 3.1. TEXT FILE.

    4. Krugman, Paul (1993) "How I Work," The American Economist (Fall 1993) 37:25-31.

    5. Landes, William (1993) "How I Work," The American Economist . CITE?

  18. 83. RESEARCH

    1. *``Review Discussion: Game Theory and the Law,'' (with Kenneth Dau-Schmidt, Michael Alexeev, Jeffrey Stake and Robert Heidt), Law and Society Review , 31: 613-629 (1997). TEXT FILE

    2. * ``Some Good Books,'' January 5, 1996. TEX

    3. ``Some Referee Reports'' notes

    4. ``Papers About Which Referee Reports were Written.''

    5. * David Levine advice for PhD students. HTML.

    6. "Memorandum of Agreement," book contract. A real meta-entry. This would be the book contract between Blackwell and Rasmusen, included to illustrate real world contracts' complexity as well as to show what a book contract looks like.

    7. Bower et al. (1994) ``Protocol, Etiquette, and Responsibilities of Reviewers in Finance'' , Financial Practice and Education , Fall/Winter 199, 418-24.

    8. * ``The University of Chicago. Starting Research Early'' Harry Roberts and Roman Weil. (August 14, 1970).

    9. "Shooting the Bird's Eye," pp. 18-19 of The Five Sons of King Pandu: The Story of the Mahabharat , adapted from the Kisari Ganguli translation by Elizabeth Seeger. New York: William R. Scott, Inc. xxx.

    10. McCloskey, Donald (1995) "Other Things Equal: He's Smart. And He's a Nice Guy, Too," Eastern Economic Journal (Winter 1995) 21: 109-112.

    11. Davis, XXX and Hirsh XXX (XXX) "The Creation of New Mathematics: An Application of the Lakatos Heuristic," pp. 291-298 of The Mathematical Experience, xxx.

    12. * Bennett, Amanda, ``Nobel in Economics is Awarded to Three for Pioneering Work in Game Theory,'' Wall Street Journal, 12 October 1994, B12. HTML.

    13. ``3 Economists Share a Prize for Insights into How Rivalries Function,'' New York Times, 12 October 1994, C6. MISSING.

    14. Flanders, Stephanie, ``Games of Chance Set up Nobel Prize in Economics,'' Financial Times, 12 October 1994, p. 1. MISSING.

    15. Polya, G. (1957) "Summary, Example," pp. xvi-xvii, 7-20 of How to Solve It, 2nd Edition New York: Doubleday and Company, 1957 (1st ed., 1945).

    16. Nasar, Sylvia (1998) "School of Genius (Princeton, Fall 1948)," pp. 58-65 of A Beautiful Mind New York: Simon and Schuster, 1998.

  19. 84. WORKSHOPS

    1. Davis, John (1940) ``The Argument of an Appeal" from American Bar Association Journal , December 1940, 26: 895-899.

    2. *Stigler, George (1977) ``The Conference Handbook``, Journal of Political Economy , 85: 441-443. PDF FILE.

  20. 85. WRITING

    1. *Sonnenschein, Hugo & Dorothy Hodges (1980) ``Manual for Econometrica Authors'', Econometrica 48: 1073-1081 (July 1980). PDF FILE.

    2. ``Proofreading Symbols``

    3. McCloskey, Donald (1985) ``Economical Writing'' Economic Inquiry. April 1985. 24: 187-222.

    4. Harman Eleanor (1975), ``Hints on Poofreading'' Scholarly Publishing , pp. 151-157 (January 1975).

    5. Halmos, Paul (1970) ``How to Write Mathematics'' L'Enseignement Mathematique, May/June 1970. 16: 123-52.

    6. * Rasmusen, Eric ``Notes on Writing, Talking, and Listening'' January 10, 1998. TEX.

  21. *"Old Test Questions," August 6, 1998. TEX.

  22. *`` November 30, 1998 errata for Eric Rasmusen's Games and Information, Second Edition arranged by page number'' TEX.

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