55173 - Theory of Games and Negotiations

Learning outcomes

Game theory is the study of strategic behavior in situations in which players are aware of the interdependence of their actions. It follows that the right choice depends upon the choices made by others. Game theory offers a systematic way of analyzing strategic decision-making in interactive situations.

In this course I will explain the principles of game theory with an emphasis on real-world business and economic applications. Topics will include: (i) the basic notions of equilibrium; (ii) the use of credible threats and promises; (iii) the strategic use of information through signaling and screening; (iv) negotiation and bargaining, (v) bidding and auctions. Students with a background in principles of economics and business mathematics can easily understand the material. Case studies and real-life examples will be used to clarify the usefulness of game theory

 

The aim of the course is to provide students with analytic and conceptual instruments for a full understanding of game theory and its applications. At the end of the course students will be able to understand the rationale behind the use of game theory and to identify the most important policies derived by the appropriate use of game theoretical tools.

Course contents

see course website

Readings/Bibliography

Main Textbook

·        Gardner, R. (2003), Games for Business and Economics, 2nd edition, John Wiley, New York 

Further readings (available on course website)

·        Bacchiega, E., Lambertini, L. and A. Mantovani (2008), R&D-Hindering Collusion, Working Paper 651, Department of Economics, University of Bologna

·        Brandenburger, A and B. Nalebuff (1995), The Right Game: Use Game Theory to Shape Strategy, Harvard Business Review

·        Milnor, J. (1998), John Nash and “a Beautiful Mind”, Notices of the AMS, 45 (10), pp. 1329-1332.

·        Intelligent Design, Oct 18th 2007, The Economist

·        Playing Games with the planet, Sep 27th 2007, The Economist

·        Well-dressed thieves, Feb 21st 2008, The Economist

Specific readings and articles will be proposed along the course. Most of the assigned readings will come from The Economist and the Harvard Business Review. Because issues evolve rapidly, readings selected in advance can never cover the latest developments and students are encouraged to follow current issues in the field.

 

Lecture slides and specific readings will be available on the instructor's webpage. Regular attendance and active class participation are essential for a successful performance in this course. Students have to download and prepare the assigned readings prior to the respective class, in order to be able to participate and have a clear understanding of class contents.

Assessment methods

Course evaluation will be based only on the Final exam. The exam is written and the time is 1.5 hours. Candidates will be asked to answer three questions.

Previous exams are not available.

Teaching tools

The course will be taught using a wide variety of formats, including lectures, classroom discussions and case presentations. Theoretical classes will be based on the most recent theories in the field of Game Theory applied to Business and Economics. Applied classes will discuss relevant case studies; reading high-quality publications (such as The Economist and the Harvard Business Review) will be highly recommended. Case-studies will be used to evaluate the student's skills in applying the theoretical knowledge acquired during the course.

Links to further information

http://www.dse.unibo.it/mantovan/Insegnamenti

Office hours

See the website of Andrea Mantovani