Lecture 18
 - Imperfect Information: Information Sets and Sub-Game Perfection

Lecture 18 - Imperfect Information: Information Sets and Sub-Game Perfection

Author: William Sheppard June 8, 2018 Duration: 1:15:57
We consider games that have both simultaneous and sequential components, combining ideas from before and after the midterm. We represent what a player does not know within a game using an information set: a collection of nodes among which the player cannot distinguish. This lets us define games of imperfect information; and also lets us formally define subgames. We then extend our definition of a strategy to imperfect information games, and use this to construct the normal form (the payoff matrix) of such games. A key idea here is that it is information, not time per se, that matters. We show that not all Nash equilibria of such games are equally plausible: some are inconsistent with backward induction; some involve non-Nash behavior in some (unreached) subgames. To deal with this, we introduce a more refined equilibrium notion, called sub-game perfection.

Ever wondered how the strategies behind a high-stakes poker game, a political campaign, and a corporate merger might actually be connected? Yale Open Courses ECON 159: Game Theory, presented by William Sheppard, pulls back the curtain on the fascinating science of strategic decision-making. This isn't just an academic lecture series; it's a deep dive into the frameworks that explain how we interact when our choices directly impact others. Each episode unpacks core concepts-from Nash equilibrium and backward induction to credibility and signaling-using clear explanations that make these powerful ideas accessible. You’ll hear these theories brought to life through engaging examples that stretch far beyond textbook economics. Discussions might pivot from classic parlor games to analysis drawn from film narratives, historical events, and current political dilemmas, showing just how pervasive strategic thinking is in our world. The content is drawn directly from the renowned Yale College course, capturing the dynamic atmosphere of a campus classroom. For anyone curious about the hidden rules of competition and cooperation in everyday life, this podcast serves as a compelling guide. Tune in to train your mind to see the strategic layers in everything from simple interactions to complex global systems.
Author: Language: English Episodes: 24

Yale Open Courses ECON 159: Game Theory
Podcast Episodes
Lecture 9
 - Mixed Strategies in Theory and Tennis [not-audio_url] [/not-audio_url]

Duration: 1:12:52
We continue our discussion of mixed strategies. First we discuss the payoff to a mixed strategy, pointing out that it must be a weighed average of the payoffs to the pure strategies used in the mix. We note a consequence…
Lecture 8
 - Nash Equilibrium: Location, Segregation and Randomization [not-audio_url] [/not-audio_url]

Duration: 1:13:49
We first complete our discussion of the candidate-voter model showing, in particular, that, in equilibrium, two candidates cannot be too far apart. Then we play and analyze Schelling’s location game. We discuss how segre…
Lecture 7 - Nash Equilibrium: Shopping, Standing and Voting on a Line [not-audio_url] [/not-audio_url]

Duration: 1:11:21
We first consider the alternative “Bertrand” model of imperfect competition between two firms in which the firms set prices rather than setting quantities. Then we consider a richer model in which firms still set prices…
Lecture 6 - Nash Equilibrium: Dating and Cournot
Overview [not-audio_url] [/not-audio_url]

Duration: 1:12:06
We apply the notion of Nash Equilibrium, first, to some more coordination games; in particular, the Battle of the Sexes. Then we analyze the classic Cournot model of imperfect competition between firms. We consider the d…
Lecture 5 - Nash Equilibrium: Bad Fashion and Bank Runs [not-audio_url] [/not-audio_url]

Duration: 1:09:13
We first define formally the new concept from last time: Nash equilibrium. Then we discuss why we might be interested in Nash equilibrium and how we might find Nash equilibrium in various games. As an example, we play a…
Lecture 4 - Best Responses in Soccer and Business Partnerships [not-audio_url] [/not-audio_url]

Duration: 1:12:04
We continue the idea (from last time) of playing a best response to what we believe others will do. More particularly, we develop the idea that you should not play a strategy that is not a best response for any belief ab…