Lecture: Economics and Computation

Lecturer: Prof. Dr. Sven Seuken
Teaching Assistants: Mike Shann, Timo Vollmer
Teaching Language English
Level BSc, MSc
Academic Semester Spring 2012
Time Mondays, 14:00 - 15:45
Thursdays, 12:15 - 13:45
Location AND-3-02 (Andreasstr. 15)
AP (ECTS): 6 (including a mark)
Office Hours Prof. Dr. Sven Seuken: email for appointments, BIN-2.A.28
Timo Vollmer: Wednesdays, 11:00 - 12:00, BIN-2.A.13
Mike Shann: Thursdays, 16:00 - 17:00, BIN-2.A.13

Course Content

In this lecture, we will cover the interplay between economic thinking and computational thinking as it relates to electronic commerce, social networks, collective intelligence and networked systems. Topics covered include: game theory, mechanism design, p2p file-sharing, eBay auctions, sponsored search auctions, behavioral economics, human computation, crowdsourcing, social choice, prediction markets, reputation systems, recommender systems, influence in networks, network dynamics, and electronic currencies. Emphasis will be given to core methodologies, with students engaged in theoretical, computational and empirical exercises.


  1. 1.3.2012: All future announcements will be posted on Piazza.

Tentative Schedule

Lecture Date Topic Reading Comprehension Questions   Fun & Interesting
1 Mon, 20.2.2012 Intro to Economics and Computation Ch-01 -   Incentives
  Th, 23.2.2012 Section: Math Refresher -   Proofs
2 Mon, 27.2.2012 Game Theory I Ch-02 Q-02   Game Theory
3 Th, 1.3.2012 Game Theory II Ch-03 Q-03   Love...
4 Mon, 5.03.2012 The P2P File-Sharing Game Ch-04 Q-04   Court...
  Th, 8.03.2012 Section: Linear and Integer Programming -   NP-complete TSP
5 Mon, 12.3.2012 Algorithmic Game Theory Ch-05 Q-05   Movie Seating
6 Th, 15.3.2012 Auction Theory and eBay Ch-06 Q-06   eBay
7 Mon, 19.3.2012 Sponsored Search Auctions, GSP Ch-07 Q-07-1   online ads
  Th, 22.3.2012 VCG Auction, Section - Q-07-2   funny advertising
8 Mon, 26.03.2012 Mechanism Design I Ch-08 Q-08   restaurant pricing
9 Th, 29.03.2012 Combinatorial Auctions Ch-10 Q-9    
10 Mon, 2.04.2012 Mechanism Design II Ch-08.2-8.4 Q-10    
  Th, 5.04.2012 Section -   -
  Break (Easter)          
11 Th, 19.4.2012 Human Computation Ch-11 Q-11   Video
12 Mon, 23.4.2012 Social Choice Ch-12 Q-12   Elections
Voting Machines
13 Th, 26.4.2012 Reputation Systems Ch-13 Q-13   eBay
Online Reviews
  Mon, 30.04.2012 Truthful Elicitation of Subjective Beliefs Ch-14 Q-14    
14 Th, 3.05.2012 Section      
15 Mon, 7.05.2012 Prediction Markets Ch-15 Q-15   Betting on presidents
Predicting the Future
16 Th, 10.05.2012 Recommender Systems Ch-16 Q-16   The 1 Million Dollar Prize
Blade Runner
  Mon, 14.05.2012 Section        
  Break (Ascension Day)          
17 Mon, 21.05.2012 Transitive Trust Mechanisms Ch-17 Q-17    
18 Th, 24.05.2012 Electronic Currencies Ch-18 Q-18   Bitcoin Video
Bitcoins stolen
19 Th, 31.05.2012 Review Session        
  Mon, 11.06.2012 Final Exam        

Homework Assignments (tentative schedule)

Number Out Date Due Date Topic Download
00 Th, Feb 23 Wed, Feb 29, 23:59 Piazza - NB - Learning Catalytics
01 Mon, Feb 27 Sun, March 4, 23:59 Repeated Games - Prisoner's Dilemma
02 Mon, Feb 27 Th, Mar 8, 12:15 Game Theory (Theory)
03 Th, Mar 8 Mon, March 19, 14:00 BitTorrent (Programming)
04 Mon, Mar 19 Mon, March 26, 14:00 Auctions and Algorithm Game Theory (Theory)
05 Mon, Mar 26 Th, Apr 5, 12:15 Ad Auctions (Programming)
06 Th, Apr 5 Th, Apr 19, 12:15 Mechanism Design and Combinatorial Auctions (Theory)
07 Th, Apr 19 Th, May 3, 12:15 Crowdsourcing/MTurk (Programming)
08 Th, May 3 Mon, May 14, 14:00 Social Choice/Reputation Systems (Theory)
09 Mon, May 14 Th, May 24, 12:15 Recommender Systems (Programming)
10 Th, May 24 Th, May 31, 12:15 Networks (Theory)

Teaching Format and Setup

  1. This course will be structured differently from most courses at IfI: For each lecture, there will be lecture notes (approx. 15 pages per lecture) that students must read before class to learn the new material at their own pace. Students must answer 3-4 short comprehension questions before every class to show they have completed the readings. During class, we will not go over all of the material from the lecture notes. Instead, lectures will be interactive, illustrating the concepts from the lecture notes (via experiments, demos, etc.), and students are expected to participate during class discussions.
  2. Approximately every second week, there will be a section (exercise session) instead of the regular lecture to practice some of the concepts.
  3. There will be approximately 4 theoretical homework exercises that require non-trivial mathematics to deepen the understanding of the theoretical content of the course.
  4. There will be approximately 4 programming exercises where students need to apply the concepts learned in class. We will most likely use the following four applications: i) P2P file-sharing via BitTorrent, ii) sponsored search auctions, iii) crowdsourcing via Amazon Mechanical Turk, and iv) recommender systems.


The successful completion of all classes from the assessment level is required. No prior knowledge is required. Any background in microeconomics, multi-agent systems, or artificial intelligence would be helpful. Students need to be able to program to solve the practical homework exercises. We will provide source code that students must extend, most likely in Python or Java (which are both trivial to learn if you know the other).

Target Audience

Recommended for all BSc and MSc students with an interest in topics at the intersection of economics and computer science.

Teaching/Learning Goals

  1. Understand the importance of economic thinking in computational domains, and of computational thinking in economic domains.
  2. Be able to develop applicable models of complex Internet systems.
  3. Be able to analyze the behavior of systems that include people, computational agents as well as firms, and involve strategic behavior.
  4. Be able to solve both mathematical and conceptual problems involving such systems.
  5. Be able to write programs that implement strategic agents and mechanisms.


  1. Comprehension questions
  2. Class participation
  3. Exercises (approximately 4 theoretical and 4 programming exercises)
  4. There may be one midterm exam in the middle of the semester.
  5. Written final exam scheduled for 11.06.2012.

The exact grading breakdown will be announced at the beginning of the semester. Roughly, it will be:

  1. Comprehension questions and class participation: 15%
  2. Exercises: 35%
  3. Exams: 50%

For the MSc students taking the course, the theoretical exercises and the programming exercises will be slightly longer than for the BSc students, with more sub-tasks to be completed. However, the exams will be the same.

Additional Information

  1. Completing the readings before class, the theoretical and the programming exercises will require a significant amount of work. Students must be prepared to do this work continuously throughout the semester to successfully complete this course.
  2. This course is offered simultaneously at the BSc and MSc level. Students who register for the MSc level will have to complete homework exercises that contain additional tasks compared to the BSc level. However, the exams will be the same.
  3. It is very likely that this course will count as a “required elective” for all BSc and MSc students. An official decision regarding this regulation is expected for March 2012.