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Jun 2018
1h 10m

Lecture 23 - Asymmetric Information: Si...

William Sheppard
About this episode
We look at two settings with asymmetric information; one side of a game knows something that the other side does not. We should always interpret attempts to communicate or signal such information taking into account the incentives of the person doing the signaling. In the first setting, information is verifiable. Here, the failure explicitly to reveal inform ... Show More
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Jun 2018
Lecture 24 - Asymmetric Information: Auctions and the Winner's Curse
We discuss auctions. We first distinguish two extremes: common values and private values. We hold a common value auction in class and discover the winner’s curse, the winner tends to overpay. We discuss why this occurs and how to avoid it: you should bid as if you knew that your ... Show More
1h 2m
Jun 2018
Lecture 22 - Repeated Games: Cheating, Punishment, and Outsourcing
In business or personal relationships, promises and threats of good and bad behavior tomorrow may provide good incentives for good behavior today, but, to work, these promises and threats must be credible. In particular, they must come from equilibrium behavior tomorrow, and henc ... Show More
1h 15m
Jun 2018
Lecture 21 - Repeated Games: Cooperation vs. the End Game
We discuss repeated games, aiming to unpack the intuition that the promise of rewards and the threat of punishment in the future of a relationship can provide incentives for good behavior today. In class, we play prisoners’ dilemma twice and three times, but this fails to sustain ... Show More
1h 15m
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