MANAGERIAL DECISION MAKING

The course aims to provide an introduction to game theory, that is, the discipline that studies the behavior of interacting decision makers using formal tools. Since an interaction involving two or more decision makers with preferences over the outcomes of the interaction (i.e., a game) is characterized by the fact that the consequences of one decision maker’s actions may depend on the actions of other decision makers, the idea of decision makers who reason and anticipate others’ behavior lies at the core of the concept of strategic reasoning. Thus, starting from the study of individual decision-making, the course aims to analyze strategic reasoning by focusing on static and dynamic strategic interactions.

No prerequisites.

Knowledge and understanding: This course will provide students with theoretical tools to model and analyze strategic interaction. As such, it will enhance students’ understanding of economic phenomena. Applying knowledge and understanding: Students will be able to decompose decision processes and obtain predictions about the subjects involved in decision-making tasks. Making judgements: Students will be able to assess decision processes, as well as the rationale behind specific decisions. Communication skills: This course will provide students with the opportunity to learn and internalize notions and concepts that can be effectively used both to improve the communication of their ideas and to convey economic insights to a non-specialized audience. Learning skills: This course will provide students with tools that can be employed in decision-making processes more broadly.

– Decision Theory (preferences \& utility); – Games Representation (complete vs incomplete \& static vs. dynamic); – Dominance Notions \& Rationalizability; – Nash Equilibrium with Applications; – Correlated Equilibrium with Applications; – Subgame Perfect Equilibrium with Applications; – Repeated Games; – Bargaining; – Bayesian Games; – Signaling.

Last editions of: – Joel W. Watson "Strategy: An Introduction to Game Theory" [W. W. Norton & Company]; – Martin J. Osborne "An Introduction to Game Theory" [Oxford University Press]. Slides will be provided.

Lectures. Practice classes.

The final grade will be calculated as follows: – 67% of the grade will be based on a written exam in multiple-choice format; – 33% of the grade will be based on continuous assessment of the student’s participation in class activities. For students who will not attend classes, the final grade will be based solely on the written multiple-choice exam.

Pass the exam.