Formal Political Theory II: Applications

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Formal Political Theory II: Applications PS 526, Spring 2007, Thursday 3:30-6:00 p.m., Room: Lincoln 394 Instructor: Milan Svolik Email: msvolik@uiuc.edu Office hours: Tuesday 9 12 p.m. and by appointment, Lincoln 370 Course web page: http://netfiles.uiuc.edu/msvolik/www/teaching.html Description: This course surveys several important topics in formal political theory and the application of key game-theoretic methods to the study of politics. This course is intended for graduate students in political science who have taken an introductory course in game theory. Course Requirements: Students are required to attend lectures, read the assigned material, write up and present an assigned article, and submit a final paper. Each student will be responsible for presenting and critiquing a piece from the syllabus; we will decide the assignment of at our organizational meeting. The presentation should consist of 1. a summary of the paper s central argument, 2. an exposition of the formal model, 3. a numerical example of a key result, 4. an evaluation and a critique. The final paper should be a short (maximum 15 page double-spaced) paper that presents a formal political argument or surveys a body of formal literature. Some useful articles on how to present mathematical arguments correctly and intelligibly are: Minicourse on technical writing in Knuth, Donald E., Larrabeem, Tracy, Roberts, Paul M., and Reynolds, Barbara E. 1989. Mathematical Writing. New York: Mathematical Association of America. How to write mathematics by Paul Halmos in Steenrod, Norman E., Halmos, Paul, Schiffer, Menahem M., and Dieudonné, Jean A. 1973. How to write mathematics. New York: American Mathematical Society. 1

Boas, R. P. 1981. Can We Make Mathematics Intelligible? American Mathematical Monthly, 88. And here is a paper on how to build models: Varian, Hal R. 1997. How to build an economic model in your spare time. In Michael Szenberg, editor, Passion and craft: Economists at work. University of Michigan Press. Grading: The final grade will be composed as follows: presentation (40%), final paper (40%), and participation (20%). Readings: There is no course textbook. I will use Osborne, Martin J. 2004. An Introduction to Game Theory. Oxford: Oxford University Press for introductory exposition of some topics. recommend for political Political Game Theory: An Introduction (Analytical Methods for Social Research) by Nolan McCarty fudenberg as reference and myerson as unified exposition of fundamental results Course Outline: ( ) denotes presentation papers. Introduction and Organization Some useful writings on the history, philosophy, and role of formal models in political science are: What Is Game Theory Trying to Accomplish? by Robert Aumann in Arrow, K. and Honkapohja, S. 1985. Frontiers of Economics. Oxford: Basil Blackwell. Clarke, Kevin A. and Primo, David M. 2007. Modernizing political science: A model-based approach. Perspectives on Politics, 5(4):741 53. The Methodology of Positive Economics in Friedman, Milton. 1966. Essays In Positive Economics. Chicago: University of Chicago Press. Kreps, David M. 1990. Game Theory and Economic Modelling. New York: Oxford University Press. 2

Myerson, Roger B. 1992. On the value of game theory in social science. Rationality and Society, 4:62 73. Myerson, Roger B. 1999. Nash Equilibrium and the History of Economic Theory. Journal of Economic Literature, 37:1067 1082. The Role of Formal Models in Chapter 1 in Powell, Robert. 1999. In the Shadow of Power: States and Strategies in International Politics. Princeton, NJ: Princeton University Press. Rubinstein, Ariel. 1991. Comments on the interpretation of game theory. Econometrica, 59:909 924. Collective Action Topics: Public Goods, Voter Participation, Revolts, Global Games ( ) Palfrey, Thomas R. and Rosenthal, Howard. 1984. Participation and the provision of discrete public goods: a strategic analysis. Journal of Public Economics, 24:171 193. ( ) Palfrey, Thomas R. and Rosenthal, Howard. 1985. Voter Participation and Strategic Uncertainty. American Political Science Review, 79:62 78. ( ) Lohmann, Susanne. 1993. A Signaling Model of Informative and Manipulative Political Action. American Political Science Review, 87:319 333. Myatt, David P., Shin, Hyun Song, and Wallace, Chris. 2002. The assessment: Games and coordination. Oxford Review of Economic Policy, 18(4):397 417 Signaling Games Topics: Perfect Bayesian Equilibrium, Entry Deterrence, Crisis Escalation, War of Attrition Sections 10.1-10.7 in Osborne (2004). ( ) Epstein, David and Zemsky, Peter. 1995. Money Talks: Deterring Quality Challengers in Congressional Elections. American Political Science Review, 89:295 308. ( ) Fearon, James D. 1994. Domestic Political Audiences and the Escalation of International Disputes. American Political Science Review, 88(3):577 592. 3

( ) Schultz, Kenneth A. 1998. Domestic opposition and signaling in international crises. American Political Science Review, 92(4):829 44. Games with Communication Topics: Perfect Bayesian Equilibrium, Cheap Talk, Legislative Organization Sections 10.8 and 10.9 in Osborne. Farrell, Joseph and Rabin, Matthew. 1996. Cheap Talk. Journal of Economic Perspectives, 10:103 118. Repeated Games Topics: Cooperation in the Prisoner s Dilemma, Folk Theorem, Non-Nash Reversion, Interethnic Cooperation, Trade Wars, Markov Perfect Equilibrium Chapters 14 and 15 in Osborne (2004). ( ) Greif, Avner, Milgrom, Paul, and Weingast, Barry R. 1994. Coordination, Commitment, and Enforcement: The Case of the Merchant Guild. Journal of Political Economy, 102:745 776. Agency Theory and Mechanism Design Topics: Adverse Selection, Moral Hazard, Revelation Principle, Sequential Equilibrium ( ) Ferejohn, John. 1986. Incumbent performance and electoral control. Public Choice, 50:5 26. ( ) Fearon, James D. 1999. Electoral accountability and the control of politicians: Selecting good types versus sanctioning poor performance. In Bernard Manin, Adam Przeworski, and Susan Stokes, editors, Democracy, Accountability and Representation, pages 55 97. Cambridge: Cambridge University Press. ( ) Epstein, David and O Halloran, Sharyn. 1994. Administrative Procedures, Information, and Agency Discretion. American Journal of Political Science, 38:697 722. ( ) Myerson, Roger B. 2006. Federalism and Incentives for Success of Democracy. Quarterly Journal of Political Science, 1:3 23. 4

Bargaining Topics: Crisis Bargaining, Bargaining in Legislatures, Dynamic Bargaining Chapter 16 in Osborne (2004). ( ) Fearon, James D. 1995. Rationalist Explanations for War. International Organization, 49(3):379 414. ( ) Baron, David P. and Ferejohn, John A. 1989. Bargaining in Legislatures. American Political Science Review, 83:1181 1206. 5