Game Theory

In the centre of our discussion in this course are multi-person decision making situation in which the outcomes depend on your action and on the actions of others. In Game Theory such a situation is called a game and the actors in such a game are called players, and a player has the move if he is called to act. To classify the variety of games it is useful to consider the following two basic criteria:

1. Timing of moves: According to the timing of the players' moves, games can either be simultaneous or sequential. In the first case, all players choose their actions without knowing how the others have acted or will act. Such games are called simultaneous-move games. In the second case, at least one of the players knows when acting what another has done before. Such a game is called a sequential-move game.
2. Degree of private information: Private information arises in those situations in which at least one player knows more about the decision making situation than another player. If this is the case, the game is one of incomplete information. Otherwise, the game is said to be of complete information.

Given these two dimensions, we discuss the following four classes of games in our course: Simultaneous-move Games of Complete Information, Sequential-move Games of Complete Information, Simultaneous-move Games of Incomplete Information, and Sequential-move Games of Incomplete Information.

By the end of the course, students will advance their knowledge in different ways:

• Learning the concepts of game theory will help you to understand the basic drivers of interactive behaviour and be helpful for your master thesis
• Learning to create value through team work will be useful for other group works and cases
• Learning to apply game theoretical basics to practical economic issues and real-world scenarios will improve your critical thinking in other courses
• Learning to structure a problem in own words, but also using mathematics will be useful for your university and business career
• Asking the right questions or detecting inconsistencies in discussions improves your communication skills

Jost, Weitzel: Strategic Conflict Management, 2007, Edward Elgar. Gibbons: A Primer In Game Theory, Princeton University Press, 1992.

Lecture

Assignments

Presentation

Group assignments: 50%

Individual assignments: 30%

Presentation of individual and group assignments: 20%

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