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Choose an example of a real-world strategic interaction and model it using the tools that we have covered in the course. It can be an example from economics, politics, biology, law, etc. It should not be an example that was covered in lectures or in the textbooks. You should go beyond the most basic games covered in the course, i.e., it should involve at least one of the following: many players, continuous payoffs, some sequential moves or imperfect information. In total the assignment should be between 1500 and 2000 words in length.
In your answer you should include the following:
Provide a complete description of the game.
Explain any assumptions that you have made when setting up the
game.
Explain the values of the payoffs that you have chosen and what
they represent.
Describe all of the possible equilibria of the game. (It is fine if only
one equilibrium exists, but if there is more than one, then you
should describe all of them.)
Write an analysis of the game. Do you think the predictions are
realistic Are the assumptions too strong How might the results change if you changed some of the assumptions What might be missing from the game Are there any policy implications from the predictions from the game In this section you may discuss existing literature that models similar situations but a detailed literature review is not required.
Marks will be awarded for the following:
Clarity and structure
Originality
Level of difficulty
Accuracy (i.e. how well do you describe the equilibria of the game)
Analysis: investigating how the assumptions made in the set-up of
the game influence the outcome and discussing how the outcome of the game might change if the environment or structure of the game were slightly different.