Program Overview

Game Theory and Strategic Decisions Program

Overview

The Game Theory and Strategic Decisions program is a comprehensive course that delves into the strategic interactions between rational agents. It has a myriad of applications in politics, business, and sports. A special branch of Game Theory, Auction Theory, has recently guided the development of Ebay, Google advertising auctions, and Wireless spectrum auctions.

Program Structure

The course will be organized around three big themes:

• Introduction to the main solution concepts in Game Theory: dominance, iterated deletion of dominated strategies, Nash equilibrium, backward induction, subgame perfect equilibrium. Special emphasis will be given to real-life examples, such as how to shoot penalties, why companies cluster in some locations, and the Cuban missile crisis.
• Auction theory: How to optimally bid in an auction? How to optimally design an auction? The course will cover first and second-price auctions, the revelation principle, common-value auctions with imperfect information (the winner’s curse), and applications to Ebay auctions, Google advertising auctions, and Wireless spectrum auctions.
• Evolutionary game theory: An application of game theory to biology, exploring how cooperative behavior emerged from Darwinian competition through repeated interactions.

Learning Outcomes

By the end of the course, students must be able to:

• Compute the Nash equilibria of simple games in normal form
• Compute the Nash equilibria of simple games in extensive form and determine which of these equilibria are subgame perfect
• Compute mixed-strategy equilibria of simple games
• Analyze first and second-price auctions
• Model how a cooperative equilibrium can be sustained with infinitely-repeated games
• Compute the fixed point of optimal best responses
• Model real-life situations as games and find the equilibria
• Solve dynamic games through backward induction

Transversal Skills

The program aims to develop the following transversal skills:

• Plan and carry out activities in a way that makes optimal use of available time and other resources
• Use a work methodology appropriate to the task
• Continue to work through difficulties or initial failure to find optimal solutions

Teaching Methods

The course will employ the following teaching methods:

• Lectures
• Homeworks
• Case studies

Expected Student Activities

Students are expected to:

• Attend lectures
• Complete homeworks in groups
• Participate in class

Assessment Methods

The assessment will be based on assignments completed in groups during the semester, which may include qualitative, quantitative, or real-world case studies (100%).

Supervision

The program will provide the following supervision:

• Office hours: Yes
• Assistants: Yes
• Forum: Yes

Resources

• Lecture notes will be provided for each lecture
• Virtual desktop infrastructure (VDI): No

Program Details

• Semester: Fall
• Number of places: 80
• Exam form: During the semester (winter session)
• Subject examined: Game theory and strategic decisions
• Courses: 2 hours per week x 14 weeks
• Type: Mandatory

Schedule

The course will take place on Tuesdays, 13h - 15h: Lecture MAB111

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