Program Overview

Applications of Game Theory to Environmental Problems

Course Description

This course introduces students to examining game theoretical concepts and models, connecting them to environmental issues. The course examines how game theory helps rationalize the decision-making process of agents and anticipate the effects of different policies promoting green practices.

Course Details

• ECTS: 5
• Form of instruction: Classroom instruction
• Form of examination: Take-home assignment (Assign)
• Language of instruction: English
• Level: Master
• Location: Aarhus

Course Content

The course content includes:

• Static games of complete information
• Static games of incomplete information
• Climate change and pollution
• Tragedy of the commons
• Environmental policies (command-and-control regulation and market-based incentives)
• Effects of policies on Investment in clean technology
• Study of different environmental policies in the EU and their effects on firms’ investment in abatement

Description of Qualifications

Upon completing the course, students will acquire knowledge about:

• Different decision-making processes
• Different concepts of game theory
• The role of information on the decision-making process
• How environmental issues can be rationalized from a strategic point of view
• Identifying different tools that induce agents to solve environmental problems
• Rationalizing the effects of environmental policies on firms

Students will also develop skills to:

• Solve complex issues using a game theoretical approach
• Identify how firms react to different policies
• Anticipate how green technology impacts the market structure
• Design different strategic settings
• Solve a decision-making problem considering externalities

Competencies

Students will be able to:

• Apply independently concepts and key insights from game theory to real case studies and conciliate between the interests of polluting firms and the society
• Make academically well-founded and responsible policy recommendations and independent decisions
• Provide well-justified argumentation, critically reflect upon reached decisions and possible solutions, and subsequently select between different policy recommendations to tackle environmental problems

Literature

• Game Theory: An Introduction with Step-By-Step Examples, Espinola-Arredondo and F. Munoz-Garcia, Palgrave MacMillan, December 2023
• Common Pool Resources: Strategic Behavior, Inefficiencies, and Incomplete Information, A. Espinola-Arredondo and F. Munoz-Garcia, Cambridge University Press, October 2021
• Charles Kolstad, Environmental Economics, Oxford University Press, 2000

Examination

• Form of examination: Take-home assignment (Assign)
• Form of co-examination: No co-examination
• Assessment: 7-point grading scale
• Permitted exam aids: All

Requirements for Taking the Exam

• In order to participate in the exam, there is an 80% attendance requirement

Comments

• The exam consists of a portfolio of written assignments, which students work on during the course
• The assignments are individual, and students receive collective feedback before submitting a finalized version for grading
• The finalized version should contain all assignments in one PDF file and be submitted through WISEflow at the end of the course
• The portfolio consists of the following 3 assignments:
  • Assignment 1: Game Theory Concepts (week 1)
  • Assignment 2: Case Study I (CPR and Market Based Policy, week 2)
  • Assignment 3: Case Study II (Abatement and Labelling, week 3)

Re-exam

• Re-exam: Written take-home exam (max. 36,000 characters including spaces)
• The dates for the first retake are:
  • 27th October: You will receive your exam question via WISEflow
  • 3rd November: Deadline for submitting via WISEflow
• The dates for the second retake are:
  • January 30th: You will receive your exam question via WISEflow
  • February 6th: Deadline for submitting via WISEflow

Teaching

• Form of instruction: Classroom instruction
• Instructor: Ana Espinola-Arredondo
• Course coordinator: Ana Alina Tudoran

Comments on the Form of Instruction

• This course will be taught in person, and its main focus is to examine environmental issues, such as climate change, green washing, pollution, and waste management, from a strategic point of view
• We will examine real-life examples (case studies) and study how these examples can be rationalized using game theory

Academic Prerequisites

• Intermediate Microeconomics is highly recommended, as well as intermediate calculus and algebra

Language of Instruction

• English

Hours - Week - Period

• Teaching dates: 2 July – 18 July
• The deadline for handing in the final portfolio is Friday, July 25th at 12:00 Noon
• Lectures are expected to be held between 9 am and 1 pm

Expected Student Workload

• Classroom attendance: 52 hours
• Preparation: 75 hours
• Feedback activity: 5 hours
• Papers (prerequisites): 15 hours
• Exam: 10 hours

Type of Course

• Type of course: Summer University
• Primary programme: Master's Degree Programme in Economics and Business Administration
• Related programmes: Master's Degree Programme in Business Administration, Master's Degree Programme in Business Administration and Commercial Law, Master's Degree Programme in Economics, Master's Degree Programme in Technology Based Business Development Engineering
• Department: Department of Economics and Business Economics
• Faculty: Aarhus BSS
• Location: Aarhus
• Maximum number of participants: Maximum 40 participants
• 10 seats are reserved for international exchange students from AU partner universities