Scribd
Upload
438 views4 pages

SGT-Introduction and Outline

This course provides an introduction to strategic game theory for managers. It aims to enhance students' ability to think strategically in complex business environments involving interactions with competitors, employees, and other stakeholders. The course will cover games of complete and incomplete information, including concepts like Nash equilibrium, repeated games, signaling, and auctions. Evaluation will consist of two quizzes, a term paper, and a final exam focusing on problem-solving applications of game theory concepts to business strategy.

Uploaded by

Dharma Rajan M
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
438 views4 pages

SGT-Introduction and Outline

This course provides an introduction to strategic game theory for managers. It aims to enhance students' ability to think strategically in complex business environments involving interactions with competitors, employees, and other stakeholders. The course will cover games of complete and incomplete information, including concepts like Nash equilibrium, repeated games, signaling, and auctions. Evaluation will consist of two quizzes, a term paper, and a final exam focusing on problem-solving applications of game theory concepts to business strategy.

Uploaded by

Dharma Rajan M
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Strategic Game Theory for Managers

Sumit Sarkar

Course Objective:

People rarely make decisions in a vacuum. The choices we make affect others, and their
choices impact us. Such situations are known as "games" and “game-playing”, while
sounding whimsical, is serious business. Managers frequently play "games" both within
the firm with employees, other stake-holders, other divisions etc. as well as outside the
firm with competitors, customers and regulators! The goal of this course is to enhance
your ability to think strategically in complex, interactive environments. Knowledge of
game theory will give you an advantage in such strategic settings.

Internationally, a lot of integration is taking place between decision theory, particularly


applied game theory, and business strategy. On one hand, applied game theorists are
trying to draw on real life management practices to develop newer and more relevant
theories. On the other hand, strategists are coming to depend on game theory to provide a
general framework for organizing the otherwise incoherent mass of facts available to
them. In this context, the current course seeks to provide the students with an introduction
to the interface between game theory and strategy.

Methodology:

It is a concept based course and “case method” won’t be used as such. However, we will
use cases (mostly caselets) to motivate the concepts and to provide a richer
understanding.

Once a concept is introduced, we’ll solve problems to get used to the concept and for
clarity. Then we will go for applications where we will use cases. You will have to learn
how to remove the junk from a case study and see through the core problem and make
strategic decisions.
Text books:

Dixit, A. K. and Barry J. Nalebuff (1993); Thinking Strategically, W. W. Norton.

Dixit, Avinash K., and Susan Skeath (1999); Games of Strategy. New York, NY: W. W.
Norton & Company, ISBN: 0393974219.

(A compilation of chapters from the above two books will be given to you in form of a
study material)

Reference books:

Watson, J. (2004): Strategy ??? An Introduction to Game Theory; W. W. Norton & Co.

(This book will be supplied to you from the library)

Osborne, M. J. (2004); An Introduction to Game Theory, Oxford

Gibbons, R. (1992); A Primer in Game Theory, Harvester Wheatsheaf.

Milgrom, P. and J. Roberts (1992); Economics, Organization and Management, Prentice


Hall

Ghemawat, P. (ed.) (1997); Games Businesses Play: Cases and Theory, MIT Press

(Photocopies of some relevant chapters from these books will be provided to you for
referencing from time to time during the course.)

Articles:

Smith, Raymond. "Business as a War Game: A Report from the Battlefront." Fortune,
September 1996, 190-2.

Brandenburger, Adam, and Vijay Krishna. "The Gray Area: Common Sense 0, Strategic
Reasoning 6." Harvard Business Review 90, no. 4: 200-201.

Garicano, Luis, and Robert Gertner. "The Dynamics of Price Competition." Financial
Times, 18 October 1999, 2.

Chevalier, Judith. "When It Can Be Good to Burn Your Boats." Financial Times, 25
October 1999, 12.
Lieberman, Marvin B., and David B. Montgomery. "First-Mover Advantages." Strategic
Management Journal 9 (1988): 41-58.

Michaels, Daniel. "Dogfight: In the Secret World of Airplane Deals, One Battle Up Close
- Boeing, Airbus Vied to Meet Cutthroat Terms of Iberia." The Wall Street Journal, 10
March 2003.

McMillan, John. "Selling Spectrum Rights." Journal of Economic Perspectives 8


(Summer 1994): 145-62.

Course Content:

Part I: Games of complete information

Theory:

Simultaneous move games and Nash equilibrium; Pure strategy vis-à-vis mixed strategy;
Sequential move games and sub-game perfect Nash equilibrium; Repeated games;
Commitment and Strategic Moves - Credibility, threats, and promises as ways to change
the game being played. Evolutionary games.

Applications:

Static and Dynamic games of Price and non-price competition; Commitment strategies;
Entry and exit decisions and entry deterrence strategies; Pricing strategies, capacity
commitment; War of attrition; Co-ordination games; Reputation formation; Bank runs;
Bargaining and Tournament games; Collective-action games.

Part II: Games of incomplete information

Theory:

Static games of incomplete information and Bayesian Nash equilibrium; Dynamic games
of incomplete information and Perfect Bayesian equilibrium; Signaling games.

Applications:

Brinkmanship; Reputation and strategic irrationality; Auctions; Contracts: Adverse


selection and moral hazard in capital, labor and insurance markets (e.g., takeovers, wage
contracts, insurance contracts); Job market signaling; Signaling with capital structure and
dividend policies; Signaling to deter entry; Signaling to resolve Adverse Selection.

Evaluation:

Quiz 1 20%

Quiz 2 20%

Term-paper 25%

End-term 35%

Exams and quizzes will be entirely problem based. The quizzes are open book. End-term
may be open book or conventional closed book, depending on the performance of the
class in the quizzes.

Grading:

You’ll score marks in the quizzes and exams out of a total of 100 marks.

Less than 10 F

10 – 19 D

20 – 29 D+

There won’t be any absolute cut-off for grades C – A+. Grading is relative and is based a
discrete normal distribution in the range of marks 30 to whatever is the highest score.
Roughly top 10% students in that range of marks get A+, next 15% A, next 25% B+, next
25% B, next 15% C+ and the bottom 10% C.

You might also like