Minor Game Theory for Managers
- Broadening minor
- Minor code
- Belongs to study programme
Week 1: Strategies and equilibrium. The concepts of strategy and equilibrium are developed to capture strategic interactions, and are applied to bargaining, strategic delegation, and agenda control.
Week 2: Information structure, i.e. taking turns in the dark. Informational differences between players constrain their choices and may make creating (endogenously) uncertainty attractive.
Week 3: Incomplete information, i.e. I know something you don’t know. People have often some information only known to them, such as their ability, production costs, or market circumstances. Choices may reveal (part of) this information.
Week 4: Contract theory. The developed game theoretic concepts are applied to address incentive and selection issues in and between organizations.
Week 5: Beliefs and Perfect Bayesian Equilibrium, i.e. what you do, tells me who you are. When players have private information and move sequentially, then players may learn the hidden information by the choices others make.
Week 6: Business is war, and business is peace. Repeated games may overcome the two seemingly opposing perspectives of competition and cooperation. These ideas are applied to address reputation, empowerment, cartel stability, and the transaction platform eBay.
Week 7 & 8: Reaction functions and Strategy typology, i.e. structuring the market to your own interest. A strategy typology will be developed to cover strategic aspects of many topics in finance (equity participations, limited liability, deep pocket), marketing (product differentiation, advertising, compatibility, assortment), organization (delegation, royalties/licenses, most-favoured-customer-clauses, contracts), technology (capacity, spillovers, dynamic economies of scale), and industry structure (fragmentation, dual structures, leadership).
Week 9: Cooperative game theory. Cooperative game theory handles situations where the way in which players interact is unstructured. Various applications will be highlighted, such as power, cost allocation, coalitional formation, and matching mechanisms.
Week 10: Exam preparation?
This course will examine the basic ideas of game theory and apply them to all fields in management. Themes and patterns are identified that are common to situations in all fields of management (accounting, finance, marketing, organization, strategy, supply chains, technology), like capacity to think ahead, grasp how others think and behave, commitments, threats and promises, contract design, strategies of signalling, and the emergence of cooperation.
In this course, we aim to achieve therefore three goals:
- Provide insight in strategic management situations, using a game theoretic perspective;
- Improve your management thinking by using game theory;
- Enable you to develop better general management strategies.
Concepts are developed incrementally to highlight their logic, while no mathematical skills are required beyond the high school level. There is no prior knowledge required.
- Students from the entire Erasmus University Rotterdam, and elsewhere, are welcome.
- Contact hours: 6
- Self study hours: 34
- All RSM minors have mandatory attendance.
Lectures, presentation, group assignments, paper.
Watson, J., Strategy, an Introduction to Game Theory, Norton, 2013.
(There are many additional game theory textbooks which may be consulted by students. A game theory textbook in Dutch is G.W.J., Speltheorie en Ondernemingsgedrag, Lemma, 1998. Available from lecturer/author, Euro 30.)
Sheets will be made available on Canvas.
Supporting material (to be announced).
Method of examination
- Team assignments (8) and presentation (1)
- Written test (individual)
- Paper (individual)
- Participation (individual)
Composition final grade
- Assignments (8) and presentation (1) (9x4=36 points, i.e. 36/136 (26,5%))
- Written test (34 points, i.e. 34/136 (25%))
- Paper (30 points, i.e. 30/136 (22%), consisting of 10% draft of Intro and Literature review, 90% final version)
- Participation (18 (classes) x 2 = 36 points, i.e. 36/136 (26,5%)
The grade of the course is based on the total number of points in the following way:
0 when the total number of points is less than 36;
(# points - 36)/10 when 36 points or more.
Only the written test and the paper have a resit possibility. A resit of the paper will only be granted when the paper has a failing grade. The resit of the paper entails choosing a new topic for your paper and will result in a grade not exceeding 6.
Oral and written feedback.
Prof. dr. George Hendrikse