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Game Theory - Course Outline 2021

This document provides the course outline for the elective course "Game Theory" offered at the Indian Institute of Management Kozhikode. The course is worth 3 credits and will be taught over 24 sessions of 75 minutes each during the fourth term of the 2021-22 academic year. The course will introduce students to modeling strategic interactions using game theory and applying the concepts to management problems. Topics will include Nash equilibrium, bargaining games, repeated games, and mechanism design. Students will be evaluated based on mid-term and end-term exams, quizzes, assignments, and a group project applying game theory to analyze a real-world problem.

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Mayank Ranjan
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166 views4 pages

Game Theory - Course Outline 2021

This document provides the course outline for the elective course "Game Theory" offered at the Indian Institute of Management Kozhikode. The course is worth 3 credits and will be taught over 24 sessions of 75 minutes each during the fourth term of the 2021-22 academic year. The course will introduce students to modeling strategic interactions using game theory and applying the concepts to management problems. Topics will include Nash equilibrium, bargaining games, repeated games, and mechanism design. Students will be evaluated based on mid-term and end-term exams, quizzes, assignments, and a group project applying game theory to analyze a real-world problem.

Uploaded by

Mayank Ranjan
Copyright
© © All Rights Reserved
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
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INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Post Graduate Programme in Management


Course Outline

Course Code and Course Title PG2E-005:Game Theory


Course type Elective
Pre-requisites (if any) NIL
Course Credit 3
Total No. of Sessions 24
Session Duration 75 minutes
Term IV
Year and Batch 2nd Year 2021-22, PGP24
Sections (if any) -

Instructor(s) Anirban Ghatak


Contact Details 9920263703
Office
Consultation Hours Tuesday/Thursday (10.30AM - 1.30PM)

Introduction

Game theory is a study of multi-person interactions in which a player’s payoff depends on what
others do. The purpose of game theory is to predict how a game might be played. Given a
problem, with a clear specification of the players (e.g.; individuals, firms, nations), the rules of
the game (e.g., who moves in what order), the strategies available to the players (e.g., cooperate
or defect; enter or do not enter a market), and the payoffs of the players under each scenario,
game theory predicts what each player would do.

Game theory has many applications in management. Here is partial list of applications covering
marketing, finance, strategy and general management: the problem of cooperation (as in
Prisoner’s Dilemma game); bargaining between players (e.g., labour-management, buyer-
seller); auction (e.g., auction of wireless spectrum or public projects); pricing by competing
firms (e.g., duopoly, OPEC); entry deterrence; M&A; principal- agent relationships; signalling
of product quality; committee decision making; spatial competition. In addition, Game Theory
helps understand key issues of economic development. This course will draw upon many of
these applications throughout the course.

Learning Outcomes/Course Objectives

At the end of this course, the students would be able to


• model various tactical and strategic decisions using Game-theoretic modelling
techniques
• utilize Game Theory to address various management decisions and design mechanisms

Textbooks and Learning Materials


Text Book(s)

• “Games of Strategy” by Avinash Dixit, Susan Skeath and David H. Reiley Jr, Third
Edition, Viva-Norton[D]

Reference Book(s)

“Games in Economic Development” by Bruce Wydick, 2008, Cambridge University Press,


ISBN 978-0-521-68715-7 [W]

“Game Theory for Applied Economists”, Robert Gibbons, 1992, Princeton University Press.

Additional Reading(s)

In addition, electronic copies of relevant reading materials will be distributed as and when
required.

Technology and Software (if any)

NIL

Other Resources (Journals, Internet Websites) (if any)

Pedagogy – Learning Process

The pedagogy consists of lectures, games and in-class presentation. The instructor expects the
students to participate actively in the class. Students are expected to read the textbooks or other
assigned readings outside of class and participate in the critical evaluation of the material
through class discussion.

Evaluation Components/Assessment of Student Learning

Evaluation Component Percentage Description


/Assessment Tool
Mid-term Exam 20% These components are required to
evaluate the students’ depth of
End-term Exam 40% understanding and ability to apply
appreciate concepts and techniques
Quiz 20% Class assignments and quizzes will
serve to continuously assess the
students’ understanding of concepts
during the course
Assignment/Project 20% The group project is meant to provide
opportunities to the students to explore
diverse perspectives for a real-world
problem of their choice to be analyzed
using game theory

Session Plan
Session Module Topic Chapter No. /
Reading material
/ Cases
1 Games of Pure Games for modelling human [D]Ch. 1, 2
Strategy behaviour [W] Ch. 1
2 Sequential Move Game [D] Ch. 3, pp. 47-
62, 71-74.
[W] pp. 29-32
3–4 Nash equilibrium, Dominance, [D] Ch. 3–4
Iterated Elimination of Dominated [W] Ch. 2, pp. 19-
Strategies, Best - Response Analysis, 24.
Minimax method for Zero - sum game
Coordination Games, Multiple
Equilibria, Focal point
The Battle of the Sexes Game, Stag
Hunt (or Assurance) Game, The
Game of Chicken (or Hawk Dove)

5 Development Traps & Coordination [W] Ch. 3


Games,
The role of planning in a coordination
game,
Education as a coordination game,
Coordination Failure and
Globalization
6 Rationalizability, Combining [D] Ch. 5–6
Sequential & Simultaneous Move Gibbons, pp. 73-
Games 75.
Application: Bank Runs
7 Games of Simultaneous Move Games with [D] Ch. 7 and
Mixed Strategy Mixed Strategies Probability & Appendix
Expected Value
8 Simultaneous Move Games with [D] Ch. 8, pp.262-
Mixed Strategies 285
9 – 10 The Prisoner's Dilemma & Repeated [D] Ch. 11
Game
11 Bargaining Application of Game Theory: [D] Ch. 18,
Bargaining, A brief discussion on Gibbons:
discount factor Sequential
Bargaining, pp. 69-
71.
Mid Term Examination
12 Issues in Rural Poverty, Economic [W] Ch. 4
Economic Development & the Environment
Development
13 Risk, Solidarity & Reciprocity, Risk [W] Ch. 5
sharing in Present Cultures &
Repeated Games, Insurance in Patron
- Client Relationships
Exploitation in Patron - Client
Relationships, Peasant Solidarity
Networks
14 Savings, Credit & Micro finance [W] Ch. 7
Banks & Savings, How the Lending
Game is solved in Wealthy
Economics, How the Lending Game
is solved in Developing Economics
15 Property Rights, Governance and [W] Ch. 9
Corruption
16 Uncertainty and Uncertainty and Information [D] Ch. 9
Information
17 – 18 Strategic Moves: Credibility, [D] Ch. 9 and 10.
Commitment, Threats and Promises,
Schelling: Enforcement,
Communication & Strategic Moves
19 Evolutionary Evolutionary Games, Social Capital, [D] Ch. 13
Games Game - theoretic role of Religion
20 – 21 Mechanism Bidding Strategy & Auction Design Ch. 17
Design
22 Brinkmanship Ch. 15
23–24 Review Review of the Course and Student Not Applicable
Presentations
End Term Examination

Additional Instructions (if any)

a. Group formation: Project work is supposed to be carried out in groups. You need to
form teams with a maximum of four members. Details regarding the same would be
shared during the class.
b. Project Work: A real life problem has to be chosen and the concepts learnt should be
applied, necessary data should be collected and analysed to support the concepts, which
should be documented and presented in the form of a project report and power point
presentation. More details will be provided during the class hours. Deadline for
submission: 1 hour before 29th Hour of teaching (for submitting the power-point
slides); within 48 hours of the last class (for submitting the report).

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