Microeconomics III (p)

Course content

The teaching in this course may be changed to be taught either fully or partly online due to COVID-19. For further information, see the course room on Absalon. The time, place and type of assessment used for the exam may also be changed due to COVID-19, and any further information will be announced under the panel “Exam”.

This course furthers the introduction of game theory and its applications in economic models. The student who successfully completes the course will learn the basics of game theory and will be enabled to work further with advanced game theory. The student will also learn how economic problems involving strategic situations can be modeled using game theory, as well as how these models are solved. The course intention is that the student becomes able to work with modern economic theory, for instance within the areas of industrial organization, macroeconomics, international economics, labor economics, public economics, political economics and financial economics.


In the process of the course the student will learn about

  •     Static games with complete information,
  •     Static games with incomplete information,
  •     Dynamic games with complete information,
  •     Dynamic games with incomplete information, 

The first part of the course is devoted to static games with complete information. This part of the course extends the initial treatment of the subject from Microeconomics II (Mikroøkonomi II). The concept of a normal form game and solution concepts such as dominance and Nash Equilibrium are reintroduced in a formally rigorous way. Students will also study a variety of economic applications of the theory. Finally, they will look more deeply into the theory of static games with complete information by studying mixed strategies and mixed-strategy Nash equilibria, and discussing equilibrium existence.


The second part of the course extends the treatment of dynamic games with complete information. The students will learn this theory in a more rigorous way and discuss various economic applications. The students will then study games with imperfect information and repeated games. They will be introduced to extensive form games, and will learn about the relevant refinement of the Nash equilibrium concept: subgame-perfect Nash equilibrium. Again, the theory will be illustrated by economic applications.


In the third part of the course the students will study simultaneous games of incomplete information. They will learn about the concept of Bayesian Nash equilibrium and apply their knowledge to different kinds of auctions, mechanism design problems, and other applications.


The fourth part of the course is devoted to dynamic games of incomplete information. The students will analyze the implications of introducing sequential moves into the games with incomplete information. They will gain knowledge of the Perfect Bayesian Equilibrium and its refinements, and will apply the theory to signaling games and other relevant economic problems. In particular, they will look into the job-market signaling model of Spence and other asymmetric information models.


MSc programme in Economics – mandatory course at first semester - if not taken at the BSc programme in Economics


Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år (angivet med et p)

The Danish BSc programme in Economics - prioritized elective at the 3rd year (symbolized by ‘p’).

Learning outcome

After completing the course the student is expected to be able to:



  • Formally state the definition of a game and explain the key differences between games of different types (static games of complete information, static games of incomplete information, dynamic games of complete information, and dynamic games of incomplete information).
  • In detail account for the equilibrium (solution) concepts that are relevant for these games (Nash Equilibrium, Subgame Perfect Nash Equilibrium, Bayes-Nash Equilibrium, Perfect Bayesian Equilibrium).
  • Identify a number of special games and particular issues associated with them, such as repeated games (including infinitely repeated games), auctions and signaling games.



  • Explicitly solve for the equilibria of these games.
  • Explain the relevant steps in the reasoning of the solution.
  • Interpret the outcomes of the analysis.
  • Apply equilibrium refinements and discuss the solution concepts
  • Evaluate and debate the crucial assumptions underlying the theory.



  • Analyze strategic situations by modeling them as formal games.
  • Set up, prove, analyze and apply the theories and methods used in the course in an independent manner.

The teaching will consist of lectures, as well as exercise classes. While the lectures will discuss and put perspectives on the curriculum, the exercise classes will focus on exercises and applications of the theory. Some relevant experiments will be discussed.


  • Robert Gibbons. A Primer in Game Theory. Prentice Hall 1992.
  • Some short additional materials (can be downloaded from Absalon)

The course requires knowledge equivalent to that achieved in Microeconomics I and Microeconomics II at the Bachelor of Economics, University of Copenhagen


Autumn 2020:
3 hours lectures a week from week 36 to 50 (except week 42).
3 hours exercise classes a week from week 36/37 to 50 (except week 42).

Spring 2021:
3 hours lectures a week from week 6 to 20 (except holidays).
3 hours exercise classes a week from week 6/7 to 20 (except holidays).

The overall schema for the BA 3rd year and Master can be seen at KUnet:
MSc in Economics => "courses and teaching" => "Planning and overview" => "Your timetable"
BA i Økonomi/KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Timetable"/​"Se skema" at the right side of this page (E means Autumn, F means Spring). The lectures are shown in each link.

You can find the similar information in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E20; [Name of course]” or “2200-F21; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5” or “Forår/Spring – Week 5-30”
Press: “ View Timetable”

Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned schedule and can be changed until just before the teaching begins without the participant´s acceptance. If this happens it will be informed at the links in the right side, in the app myUCPH and at your personal schema at KUnet.
- That the study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered, because the room has only seats for the amount of registered student.
- The teacher of the exercise class cannot correct assignments from other students than the registered students in the exercise class except with group work across the classes.
- That all exercise classes will be taught in English.



The teaching assistants give the students individual, written feedback for three mandatory assignments. The lecturer gives collective oral feedback for quizzes and games played during the lecture.

7,5 ECTS
Type of assessment
Written examination, 2 hours under invigilation
The exam assignment is in English and must be answered in English.
Without aids
Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.


To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Class Instruction
  • 42
  • Preparation
  • 120
  • Exam
  • 2
  • English
  • 206