14 – Backward Induction: Commitment, Spies, and First-Mover Advantages

14 – Backward Induction: Commitment, Spies, and First-Mover Advantages

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We first apply our big idea–backward induction–to analyze quantity competition between firms when play is sequential, the Stackelberg model. We do this twice: first using intuition and then using calculus. We learn that this game has a first-mover advantage, and that it comes commitment and from information in the game rather than the timing per se. We notice that in some games having more information can hurt you if other players know you will have that information and hence alter their behavior. Finally, we show that, contrary to myth, many games do not have first-mover advantages.

13 – The Athenian Empire

13 – The Athenian Empire

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In this lecture, Professor Kagan traces the development and the power of the Persian empire. He also shows how the Persian empire and the Greek world eventually came into conflict through a few incidents concerning Ionian Greeks in Asia Minor, which eventually turned into the Persian Wars. Professor Kagan ends this lecture with a description of the events of the battle of Marathon in which the Athenians defeated the Persians.

13 – Sequential Games: Moral Hazard, Incentives, and Hungry Lions

13 – Sequential Games: Moral Hazard, Incentives, and Hungry Lions

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We consider games in which players move sequentially rather than simultaneously, starting with a game involving a borrower and a lender. We analyze the game using “backward induction.” The game features moral hazard: the borrower will not repay a large loan. We discuss possible remedies for this kind of problem. One remedy involves incentive design: writing contracts that give the borrower an incentive to repay. Another involves commitment strategies; in this case providing collateral. We consider other commitment strategies such as burning boats. But the key lesson of the day is the idea of backward induction.

12 – The Persian Wars

12 – The Persian Wars

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In this lecture, Professor Kagan examines in detail the development, growing pains, and emergence of Athenian democracy. He argues that the tyranny under the Peisistratids led to the development of the idea of self-government among the Athenians, which Cleisthenes used to develop Athens in a more democratic direction. One of the ways Cleisthenes was able to accomplish this was to diminish the power of the aristocracy by reordering and restructuring the tribes and giving greater power to the assembly. Finally, Professor Kagan says a word on the Athenian practice of ostracism as a political tool to protect a fledgling democracy.

12 – Evolutionary Stability: Social Convention, Aggression, and Cycles

12 – Evolutionary Stability: Social Convention, Aggression, and Cycles

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We apply the idea of evolutionary stability to consider the evolution of social conventions. Then we consider games that involve aggressive (Hawk) and passive (Dove) strategies, finding that sometimes, evolutionary populations are mixed. We discuss how such games can help us to predict how behavior might vary across settings. Finally, we consider a game in which there is no evolutionary stable population and discuss an example from nature.

11 – The Rise of Athens (cont.)

11 – The Rise of Athens (cont.)

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In this lecture, Professor Kagan traces the development of Athens. He argues that Athens, like other poleis, undergoes political and social turmoil due to the rise of the hoplite farmer. This unrest is first seen in the attempted coup d’état of Cylon and the Law of Draco. Professor Kagan also points out that in response to these developments, Solon was made sole archon of Athens to establish peace in a time of unrest. It should also be noted that Solon established laws that were moderate in nature. Therefore, it comes as no surprise that Solon was only partially successful. Eventually, a tyranny is established in Athens by Peisistratus, but Peisistratus, according to Professor Kagan, was a special type of tyrant, one that not only upheld the new laws of Solon, but was also interested in the welfare of Athens.

11 – Evolutionary Stability: Cooperation, Mutation, and Equilibrium

11 – Evolutionary Stability: Cooperation, Mutation, and Equilibrium

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We discuss evolution and game theory, and introduce the concept of evolutionary stability. We ask what kinds of strategies are evolutionarily stable, and how this idea from biology relates to concepts from economics like domination and Nash equilibrium. The informal argument relating these ideas toward at the end of his lecture contains a notation error [U(Ŝ,S’) should be U(S’,Ŝ)]. A more formal argument is provided in the supplemental notes.

10 – The Rise of Athens

10 – The Rise of Athens

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In this lecture, Professor Kagan finishes up his description of the Spartan constitution. He argues that Sparta had a mixed constitution and gained great power due to alliances that the Spartans made with their neighbors. After the discussion of Sparta, Professor Kagan examines Athens and the development of the Athenian constitution. In addition, he shows how different these two poleis were. Finally, Professor Kagan discusses the emergence of the hoplite class in Athens and the failure of Cylon to make himself tyrant of Athens.

10 – Mixed Strategies in Baseball, Dating and Paying Your Taxes

10 – Mixed Strategies in Baseball, Dating and Paying Your Taxes

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We develop three different interpretations of mixed strategies in various contexts: sport, anti-terrorism strategy, dating, paying taxes and auditing taxpayers. One interpretation is that people literally randomize over their choices. Another is that your mixed strategy represents my belief about what you might do. A third is that the mixed strategy represents the proportions of people playing each pure strategy. Then we discuss some implications of the mixed equilibrium in games; in particular, we look how the equilibrium changes in the tax-compliance/auditor game as we increase the penalty for cheating on your taxes.

9 – Sparta (cont.)

9 – Sparta (cont.)

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In this lecture, Professor Donald Kagan explores the development and character of Sparta. He points out that in Sparta, the ethos of the polis was present to an extraordinary degree. Then he describes how this came about. In short, Professor Kagan argues that the Spartans were able to create a distinct military culture on account of their subjugation of the inhabitants of Messenia, who were forced to carry on the work of farming while the Spartans trained for war. Finally, Professor Kagan examines the education and training of the Spartan citizen as well as the constitution of Sparta.