Firms frequently operate in strategic environments. In such environments performance depends on the decisions of the agent as well as the decisions of its competitors. Game theory is the formal analysis of strategic decision making.
This course teaches you the main principles of game theory, while developing your ability to think and act in strategic environments. You learn to formulate optimal business strategies, taking into account that your competitors are also formulating rational business strategies.
A wide range of business applications are used. These include price setting, contract design, agency relations, voting in boards, auctions, bargaining, advertising, and reputation building.
- Game forms
- Dominant and rationalizable strategies
- Nash equilibrium
- Dynamic games
- Repeated games
- Games with asymmetric information
- Signaling and reputation
Students will participate in two game experiments.
Learning outcome knowledge
Gain a proper understanding of game theoretic concepts and modeling: covering equilibrium in static and dynamic games, with varying information structures.
Be able to apply game models to the analysis of decisions in various business environments.
- Written exam: 100%