Prof Ignacio Palacios-Huerta NAB5.24

This course is available on the CEMS Exchange, IMEX Exchange, MSc in Economics and Management, MSc in Management, MSc in Management (CEMS MIM), MSc in Management (MiM Exchange), MSc in Management, Organisations and Governance and MiM Exchange. This course is available with permission as an outside option to students on other programmes where regulations permit.

A knowledge of basic algebra is necessary to take this course.

This course is concerned with strategic thinking. The course is an interaction of game theory, economics and business strategic management. The focus is the study of situations in which two or more decision-makers (e.g., individuals, firms, political parties, etc) interact in a strategic manner. Understanding strategic situations that involve conflict and/or cooperation has proven critical in many areas of economics, business, political science, sports, law and other areas. The emphasis is to provide the fundamental thinking of good strategic making in these situations, rather than a mathematical and formal analysis.

The purpose of this course is threefold: (1) first, to introduce relevant tools of game theory in order to capture the key elements of different strategic situations and determine the most likely outcome in each situation; (2) second, to study various real-life applications and case-studies where thinking strategically has proven critical; (3) third, to cover modern developments in behavioural game theory, in particular in the areas of intertemporal choices and strategies, decision-making under risk and uncertainty, and experiments in strategic interaction.

Students should note that this course will involve weekly calculations and numerical reasoning.

20 hours of lectures and 8 hours of seminars in the LT. 2 hours of lectures in the ST.

Students on this course will have a reading week in Week 6, in line with departmental policy.

Students will hand in 5-8 written assignments throughout the course, and feedback will be provided.

Thinking Strategically: Competitive Edge in Business, Politics and Everyday Life, WW Norton, 1993, by Avinash Dixit and Barry Nalebuff. The Art of Strategy, WW Norton, 2008, by Avinash Dixit and Barry Nalebuff. Games of Strategy, WW Norton, 3rd edition, 2009, by Avinash Dixit, Susan Skeath and David Reiley. Beautiful Game Theory, Princeton University Press, NJ, 2014, by Ignacio Palacios-Huerta. Set of academic articles and/or case studies, plus lecture notes written by instructor. Set of articles from the media.

Exam (100%, duration: 2 hours) in the main exam period.