Writing assignment
Marcin Pęski
In the writing assignment, you are going to demonstrate that you can use the skills and knowledge that you learned in the class to analyze a real-world strategic situation with asymmetric information. Your task will be to find and a describe a real-world problem, build a formal model, and analyze the model.
The paper is due on the last day of the term, Friday April 3 (that is the FACS rule and I cannot move it). You have two day grace period for weekend. For each late day after April 5, I take away 10% of the grade for the paper. So, if you don’t bring the paper before April 15, you don’t have to do it anymore.
The writing assignment is going to have four parts:
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Informal description: I expect a 1-3 page description (a story) of a strategic situation (two or more actors) that involves asymmetric information (hence, can be modeled using static or dynamic games with incomplete information).
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The situation cannot be made up, but it must somehow sourced. I am open to a very wide range of sources: it can be a work of fiction (a novel, movie, myth), or non-fiction (as a newspaper article, history book, biography, etc). The source for the story must be clearly stated at the beginning of the description. I will give points for the creativity in finding a good original story.
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The description should be informal, and relatively detailed. However, you should be able to identify the most important elements of the story for whatever you are going to analyze in the remaining parts of the paper. Because you are going to use the story to build a model, you want to focus on relatively few elements.
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The description should clearly separate the strategic environment (i.e., what players know, what are the actions that are available to them) and the strategic behavior (the actions that the players actually took)
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Formal description of the model: 1-2 pages I want you to formally describe a game with incomplete information that models the story from the previous part. The formal description should look like descriptions of models that we do in the class: players, actions, histories, beliefs, etc. I also would like you to explain how your description matches the story that you described in the previous part.
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Equilibrium analysis: 2-5 pages. You should find an equilibrium (equilibria) of the model that you describe in the previous part.
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Can you prove additional results? Comparative statics? Maybe how the behavior in the model changes if you twitch it in a particular way, replace by slightly different version?
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Concluding remarks 1-2 pages. Explain what you learned from this exercise. The main question is: does the model explain the behavior that you illustrated in the story? If not, why do you think that the game theoretic prediction failed? But you can think about other questions. For example, how does the behavior depend on the parameters of the model? Does the model illustrate some sort of inefficiency? Can you eliminate inefficiency somehow (by improving information, adding taxes, etc.)
I am going to roughly use the following grading scheme. However, I reserve the right to give a larger number of points if I am impressed by a particular element of your paper (amazing story for example, or creative results). I want to be amazed.
Item
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Questions
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Max. points (100)
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Story
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40
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Source
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Is the source appropriate (see list above)?
Is it clearly stated?
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5
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Creativity
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How original the story is?
Does the story fit the requirements (strategic situation with incomplete information)
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10
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Informal description
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Is the description of the story clear?
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10
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Separation
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Is there a clear separation between strategic environment (information and available actions) and the behavior that the players actually choose?
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10
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Overall impression
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How good is the writing/composition?
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5
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Model
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20
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Game
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Is the game formally and clearly described?
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10
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Game vs story
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Does the game clearly correspond to the story?
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5
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Overall impression
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Is the writing clear?
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5
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Results
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20
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Equilibrium
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Is the equilibrium concept clearly stated?
Is the analysis of equilibrium correct?
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10
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Additional results
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Are there any additional results (comparative statics, equilibrium with a different information structure, etc.)
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5
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Overall impression
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Is the writing clear?
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5
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Conclusions
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15
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Question
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What did you learn from this exercise.
Does your analysis describe the behavior that you illustrated in the story? Why or why not?
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10
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Additional comments
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Do you have any additional observations/recommendations/predictions that are influenced by your analysis?
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5
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