Outline Game Theory

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  • Topic: Game theory, Nash equilibrium, Prisoner's dilemma
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B6838 Game Theory
Instructor Name: Title: Tel: Email : Adjunct Faculty David Cheung Game Theory (Semester 1, Full course, No final in-class exam) (65) 9022 4161 david.cheung@ntu.edu.sg

COURSE DESCRIPTION Game theory provides managers a structured and coherent approach to making better strategic decisions in an environment where conduct of competitors is often uncertain. This course uses cases to provide both the conceptual foundations of game theory and applications to business. This course applies tools from microeconomics, industrial organization, organizational economics and game-theoretic analysis to competitive decision making. The emphasis is on the application of these concepts to business situations and strategy formulations. It also explores the identification and analysis of archetypal strategic situations frequently occurring in game theory situations (bargaining, conflicts and negotiation.) The course is divided in two parts. The first part focuses on business unit and corporate strategy. The second part focuses on understanding the foundational theory and application of Game Theory. It introduces tools to understand industry economics and the determinants of industry-wide matrix; it then studies the determinants of the individual firm’s strategy and profitability, focusing on positional, strategical, and organizational aspect. Game theory will be deployed to analyse competitive interactions when the number of players is small and the industry is being shaped by the interactions between these players. This tool is used to analyze issues such as bargaining power, price competition, entry and exit decisions, standard setting and technological competition.

HIGHLIGHTS and COURSE STRUCTURE: The course is heavily based on class participations, case discussions and knowledge sharing from industry experts. These guest speakers include, but not limited to, CEO of major financial institutions, strategists of global corporations, senior management of Asia-Pacific local players, and consultants of major firms. Students will no doubt gain “insider” and “first” experience and discussions from these guest speakers. Most class sessions will consist of both “hands-on” experiences in structured strategic situations as well as lectures about the theory underlying these situations. Discussion relating experiences in structured setting to both theory and practice are an essential aspect of the course.

LEARNING OBJECTIVES: By the end of this course, students will be able to: (a) Know the basic concepts of game theory, and how these concepts have been applied to business; (b) Evaluate and apply game-theoretic analysis, both formally and intuitively, to negotiation and bargaining situations; (c) Recognize and assess these concepts and situations in complicated negotiation settings; (d) Understand dynamic view of strategy and able to make decisions relating to pricing, signaling, capacity expansion, commitment, reputation, and entry deterrence; (e) Feel comfortable in the process of negotiation and; (f) Make vocational choices with various job industries

ASSESSMENT METHODS Class Activity / Participation Group case-study Mid-term Group effort (10%) Mid-term Presentation (25%) Final case (case study - Take home) 40% 35%

25% -----100%

GROUP PROJECT The goal of the group project is to make your study group debate and then take a clear position on an issue, usually the central question of the case, support your position, and note any issues or potential problems in a group. It is not allowed to allocate a case to one student and then not have the group debate and decide on the content. All students in the group are responsible for what is in the write-up and could be asked to explain it.

MIDTERM The format of the midterm write-up consists of 3 parts: 1. Summary / recommendation 2. Supporting argument 3. Issues and caveats Your presentation / write-up has to start with (1) a clear cut question in question form, such as...
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