Of course you should read basic definitions, starting from section 2.2, and the theorem from the book (the teorem is on page 62). Skip section 2.3 (in general you will want to skip the sections we didn't mention at all in class). Sections 2.4 to 2.6 contain the core material. You should try the exercises marked with "a". I will do 2.6.2 and 2.6.3 next time. And we'll prove the theorem then. As I said, try to show that EU implies the three axioms.

Important: read the "independence condition" on page 64 and show (it is not so difficult) that EU implies it. This is immediate after exercise 2.6.6, but since you may find that hard and it is fundamental,

We will not finish the proof of the Eu Theorem (extension from [m,M] to the whole line) in class since some of you would get bored. Whoever is reading the proof from the book is welcome to come see me for questions and clarifications.

Also as usual do the exercises marked "a". In particular do example 3.2.2, exercise 3.3.4.

You can also do exercise 2.5.6 if you can compute derivatives (which you should).

And obviously there is the coach problem: that one you can discuss collectively.

If you feel you need more you can go through sections 4.1-4.5 of Osborne.

On pure strategy equilibrium Osborne chapter 3 has nice illustrations. We will do Cournot (section 3.1) in class. You can study auctions from section 3.5 if you cannot do it from Osb-Rubi page 18. We will also cover section 3.6 in class.

Analysis of Rock-paper-scissors is in a file in the course page. In that page you can also look at The bus game, A two-by-two simple game (hiring, from Gibbons), A couple of exercises on normal form games by Joel Watson and The penalty game.

Do as much as you can, we'll work together in class next Tuesday. Have a good week end, SM.

On Friday we will complete our glance at correlated equilibria. Don't forget to look at the definition of conditional probability - either in your statistics textbook or on Wikipedia!

We have seen that in games it may be better

Other interesting examples are in Osborne ch.6: for Oligopoly the equilibrium is computed in sec.s 6.2.1-6.2.2 (the rest is analysis of equilibrium which is more economics than games, it depends on your interests...). Section 6.3 models a situation where two interest groups offer money to members of parliament to influence outcome of a vote to their favor.

Please let me know if we meet next Tuesday or Friday!

As an exercise you can answer the easy questions in the file "Long Run Cooperation in oligopoly" in the course page.

Bye bye, see you then. I am leaving on Sunday, I hope I will enjoy my break.