159. If you're here for art history,

you're either in the wrong room or stay anyway,

maybe this is the right room; but this is Game Theory, okay.

You should have four handouts; everyone should have four

handouts. There is a legal release

form--we'll talk about it in a minute--about the videoing.

There is a syllabus, which is a preliminary

syllabus: it's also online. And there are two games labeled

Game 1 and Game 2. Can I get you all to look at

Game 1 and start thinking about it.

And while you're thinking about it, I am hoping you can

multitask a bit. I'll describe a bit about the

class and we'll get a bit of admin under our belts.

But please try and look at--somebody's not looking at

it, because they're using it as a fan here--so look at Game 1

and fill out that form for me, okay?

So while you're filling that out, let me tell you a little

bit about what we're going to be doing here.

So what is Game Theory? Game Theory is a method of

studying strategic situations. So what's a strategic situation?

Well let's start off with what's not a strategic

situation. In your Economics - in your

Intro Economics class in 115 or 110, you saw some pretty good

examples of situations that were not strategic.

You saw firms working in perfect competition.

Firms in perfect competition are price takers:

they don't particularly have to worry about the actions of their

competitors. You also saw firms that were

monopolists and monopolists don't have any competitors to

worry about, so that's not a particularly strategic

situation. They're not price takers but

they take the demand curve. Is this looking familiar for

some of you who can remember doing 115 last year or maybe two

years ago for some of you? Everything in between is

strategic. So everything that constitutes

imperfect competition is a strategic setting.

Think about the motor industry, the motor car industry.

Ford has to worry about what GM is doing and what Toyota is

doing, and for the moment at least what Chrysler is doing but

perhaps not for long. So there's a small number of

firms and their actions affect each other.

So for a literal definition of what strategic means:

it's a setting where the outcomes that affect you depend

on actions, not just on your own actions,

but on actions of others. All right, that's as much as

I'm going to say for preview right now, we're going to come

back and see plenty of this over the course of the next semester.

So what I want to do is get on to where this applies.

It obviously applies in Economics, but it also applies

in politics, and in fact, this class will count as a

Political Science class if you're a Political Science

major. You should go check with the

DUS in Political Science. It count - Game Theory is very

important in law these days. So for those of you--for the

half of you--that are going to end up in law school,

this is pretty good training. Game Theory is also used in

biology and towards the middle of the semester we're actually

going to see some examples of Game Theory as applied to

evolution. And not surprisingly,

Game Theory applies to sport. So let's talk about a bit of

admin. How are you doing on filling

out those games? Everyone managing to multitask:

filling in Game 1? Keep writing.

I want to get some admin out of the way and I want to start by

getting out of the way what is obviously the elephant in the

room. Some of you will have noticed

that there's a camera crew here, okay.

So as some of you probably know, Yale is undergoing an open

education project and they're videoing several classes,

and the idea of this, is to make educational

materials available beyond the walls of Yale.

In fact, on the web, internationally,

so people in places, maybe places in the U.S.

or places miles away, maybe in Timbuktu or whatever,

who find it difficult to get educational materials from the

local university or whatever, can watch certain lectures from

Yale on the web. Some of you would have been in

classes that do that before. What's going to different about

this class is that you're going to be participating in it.

The way we teach this class is we're going to play games,

we're going to have discussions,

we're going to talk among the class, and you're going to be

learning from each other, and I want you to help people

watching at home to be able to learn too.

And that means you're going to be on film, at the very least on

mike. So how's that going to work?

Around the room are three T.A.s holding mikes.

Let me show you where they are: one here, one here,

and one here. When I ask for classroom

discussions, I'm going to have one of the T.A.s go to you with

a microphone much like in "Donahue" or something,

okay. At certain times,

you're going to be seen on film, so the camera is actually

going to come around and point in your direction.

Now I really want this to happen.

I had to argue for this to happen, cause I really feel that

this class isn't about me. I'm part of the class

obviously, but it's about you teaching each other and

participating. But there's a catch,

the catch is, that that means you have to

sign that legal release form. So you'll see that you have in

front of you a legal release form, you have to be able to

sign it, and what that says is that we

can use you being shown in class.

Think of this as a bad hair day release form.

All right, you can't sue Yale later if you had a bad hair day.

For those of you who are on the run from the FBI,

your Visa has run out, or you're sitting next to your

ex-girlfriend, now would be a good time to put

a paper bag over your head. All right, now just to get you

used to the idea, in every class we're going to

have I think the same two people, so Jude is the

cameraman; why don't you all wave to Jude:

this is Jude okay. And Wes is our audio guy:

this is Wes. And I will try and remember not

to include Jude and Wes in the classroom discussions,

but you should be aware that they're there.

Now, if this is making you nervous, if it's any

consolation, it's making me very nervous.

So, all right, we'll try and make this class

work as smoothly as we can, allowing for this extra thing.

Let me just say, no one's making any money off

this--at least I'm hoping these guys are being paid--but me and

the T.A.s are not being paid. The aim of this,

that I think is a good aim, it's an educational project,

and I'm hoping you'll help us with it.

The one difference it is going to mean, is that at times I

might hold some of the discussions for the class,

coming down into this part of the room, here,

to make it a little easier for Jude.

All right, how are we doing now on filling out those forms?

Has everyone filled in their strategy for the first game?

Not yet. Okay, let's go on doing a bit

more admin. The thing you mostly care about

I'm guessing, is the grades.

All right, so how is the grade going to work for this class?

30% of the class will be on problem sets,

30% of the grade; 30% on the mid-term,

and 40% on the final; so 30/30/40.

The mid-term will be held in class on October 17^(th);

that is also in your syllabus. Please don't anybody tell me

late - any time after today you didn't know when the mid-term

was and therefore it clashes with 17 different things.

The mid-term is on October 17^(th), which is a Wednesday,

in class. All right, the problem sets:

there will be roughly ten problem sets and I'll talk about

them more later on when I hand them out.

The first one will go out on Monday but it will be due ten

days later. Roughly speaking they'll be

every week. The grade distribution:

all right, so this is the rough grade distribution.

Roughly speaking, a sixth of the class are going

to end up with A's, a sixth are going to end up

with A-, a sixth are going to end up

with B+, a sixth are going to end up with B,

a sixth are going to end up with B-,

and the remaining sixth, if I added that up right,

are going to end up with what I guess we're now calling the

presidential grade, is that right?

That's not literally true. I'm going to squeeze it a bit,

I'm going to curve it a bit, so actually slightly fewer than

a sixth will get straight A's, and fewer than a sixth will get

C's and below. We'll squeeze the middle to

make them be more B's. One thing I can guarantee from

past experience in this class, is that the median grade will

be a B+. The median will fall somewhere

in the B+'s. Just as forewarning for people

who have forgotten what a median is, that means half of you--not

approximately half, it means exactly half of

you--will be getting something like B+ and below and half will

get something like B+ and above. Now, how are you doing in

filling in the forms? Everyone filled them in yet?

Surely must be pretty close to getting everyone filled in.

All right, so last things to talk about before I actually

collect them in - textbooks. There are textbooks for this

class. The main textbook is this one,

Dutta's book Strategy and Games.

If you want a slightly tougher book, more rigorous book,

try Joel Watson's book, Strategies.

Both of those books are available at the bookstore.

But I want to warn everybody ahead of time,

I will not be following the textbook.

I regard these books as safety nets.

If you don't understand something that happened in

class, you want to reinforce an idea that came up in class,

then you should read the relevant chapters in the book

and the syllabus will tell you which chapters to read for each

class, or for each week of class,

all right. But I will not be following

these books religiously at all. In fact, they're just there as

back up. In addition,

I strongly recommend people read, Thinking

Strategically. This is good bedtime reading.

Do any of you suffer from insomnia?

It's very good bedtime reading if you suffer from insomnia.

It's a good book and what's more there's going to be a new

edition of this book this year and Norton have allowed us to

get advance copies of it. So if you don't buy this book

this week, I may be able to make the advance copy of the new

edition available for some of you next week.

I'm not taking a cut on that either, all right,

there's no money changing hands.

All right, sections are on the syllabus sign up - sorry on the

website, sign up as usual. Put yourself down on the wait

list if you don't get into the section you want.

You probably will get into the section you want once we're

done. All right, now we must be done

with the forms. Are we done with the forms?

All right, so why don't we send the T.A.s, with or without

mikes, up and down the aisles and collect in your Game #1;

not Game #2, just Game #1.

Just while we're doing that, I think the reputation of this

class--I think--if you look at the course evaluations online or

whatever, is that this class is

reasonably hard but reasonably fun.

So I'm hoping that's what the reputation of the class is.

If you think this class is going to be easy,

I think it isn't actually an easy class.

It's actually quite a hard class, but I think I can

guarantee it's going to be a fun class.

Now one reason it's a fun class, is the nice thing about

teaching Game Theory - quieten down folks--one thing about