Game Theory - Course Outline 2021
Game Theory - Course Outline 2021
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.
• “Games of Strategy” by Avinash Dixit, Susan Skeath and David H. Reiley Jr, Third
Edition, Viva-Norton[D]
Reference Book(s)
“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.
NIL
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.
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)
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).