Instructional goals
The course introduces the main concepts of strategic thinking by means of game theory and illustrates how it can be applied. Game theory is concerned with decision making in social and strategic interaction and is presently the dominating method in all social sciences, particularly in business economics. What game theory provides are tools to (formally) represent strategic interactions, the “game forms”, and solution concepts prescribing for all interacting parties what to choose. The course introduces the main concepts and tools of game theory and applies them to actual management tasks with and without strategic interaction. Thus the course will specify concepts such as strategies, payoffs, and information conditions in static and dynamic games. In addition to standard game paradigms (board games, market games, etc.), specific applications try to capture special management problems like corporate governance, auditing, mergers and acquisitions, termination of joint ventures, etc.
Prerequisites
None
Intended learning outcomes
Knowledge and understanding:
The course will offer key theoretical tools to recognize and analyze situations of strategic interaction. Hence, will enhance the understating of economic and social phenomena within and outside firms and other organizations.
Applying knowledge and understanding:
The students will be able to define predictions about subjects’ behavior involved in situations of strategic interactions
Making judgements:
We expect students to be able to assess the sustainability and effectiveness of arrangements meant to govern economic relationships within organization as well as outside them, highlighting their strengths and weaknesses.
Moreover, students would be able to get insights about occurrence of specific economic and social phenomenon.
Communications Skills:
This course will give the students the possibility to acquire and understand major terms and concepts in order to communicate their ideas, proposals, analysis and critical reasoning in an appropriate way, but at the same time being able to convey effectively insights and economic implications to a non-specialized audience.
Learning skills:
This course will contribute to empower learners giving them very versatile tools that can be applied to many social and economic contexts. They can also be combined with knowledge from other disciplines to provide more accurate or alternative analysis.
Course Contents
Decision Making under Uncertainty: Expected Utility. Sequential and static games. Backward Induction. Equilibria in pure and mixed strategies. Sequential Rationality. (Subgame) Perfect Equilibria. Bargaining. Auctions. Repeated Games. Applications to Managerial Decision Making.
Reference Books
J. Watson, “Strategy”, Norton (latest edition).
Handouts and other supplementary material (distributed via the web page of the course)
Teaching Methods
Lectures
Practice Classes/Classroom Experiments
Assessment Method
The student will be evaluated on the basis of the individual scores achieved on:
A written test consisting of a mix of open-ended questions, multiple choice questions and exercises. The exact combination of each type of questions will be decided by the lecturer during the course. Two tests will take place during the course (weeks 6 an 10) and one at the end. The total score will be given by 35% first test, 35% second test, 30% final test. Non attending students can take a full exam (100% of grades).
Thesis assignment criteria
Pass the exam.
Does the syllabus cover sustainability topics?
No
Week 1 Contenuto sessioni on line e on campus
On campus session. Situations of strategic interaction
On-line session. Decision Making under Uncertainty: the Expected Utility model. Application Topics.
Week 2 Contenuto sessioni on line e on campus
On campus session. Static Games. Strategies.
On-line session. Beliefs. Mixed Strategies. Expected Payoff. Rationality. Common Knowledge
Week 3 Contenuto sessioni on line e on campus
On campus session. Dominance and Best Response.
On-line session. Rationalizability and Iterated Dominance. Equilibria in Pure and in Mixed Strategies.
Week 4 Contenuto sessioni on line e on campus
On campus session. Practice
On-line session. Efficient coordination in groups
Week 5 Contenuto sessioni on line e on campus
On campus session. Location games
On-line session. Price and quantity competition
Week 6 Contenuto sessioni on line e on campus
On campus session. Sequential Games
On-line session. Sequential Rationality
Week 7 Contenuto sessioni on line e on campus
On campus session. Backward Induction
On-line session. Subgame perfect equilibria
Week 8 Contenuto sessioni on line e on campus
On campus session. Entry games
On-line session. Practice
Week 9 Contenuto sessioni on line e on campus
On campus session. Bounded Rationality
On-line session. Application topics
Week 10 Contenuto sessioni on line e on campus
On campus session. Bargaining
On-line session. Repeated Games and reputation
Week 11 Contenuto sessioni on line e on campus
On campus session. Ultimatum Game and other experiments
On-line session. Practice
Week 12 Contenuto sessioni on line e on campus
On campus session. Application topics
On-line session. Practice