Game theory is a field of study that helps us understand decision making in strategic situations. In addition to being an important methodology within the economics discipline, it also gives insights into pricing and management strategies used by a business. Furthermore, game theory has wide-ranging applications in areas such as international relations, political science and military strategy. Much of game theory involves the interaction of decision makers where there is an asymmetry of information. Thus, the study of game theory can provide insights into how decision makers act when there is some important information that they cannot directly observe.
|Academic unit:||Bond Business School|
|Subject title:||Game Theory and Strategic Decision Making|
Delivery & attendance
|Attendance and learning activities:||Attendance at all class sessions is expected. Students are expected to notify the instructor of any absences with as much advance notice as possible.|
|Prescribed resources:|| |
|[email protected] & Email:||[email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.|
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Assurance of learning
Assurance of Learning means that universities take responsibility for creating, monitoring and updating curriculum, teaching and assessment so that students graduate with the knowledge, skills and attributes they need for employability and/or further study.
At Bond University, we carefully develop subject and program outcomes to ensure that student learning in each subject contributes to the whole student experience. Students are encouraged to carefully read and consider subject and program outcomes as combined elements.
Program Learning Outcomes (PLOs)
Program Learning Outcomes provide a broad and measurable set of standards that incorporate a range of knowledge and skills that will be achieved on completion of the program. If you are undertaking this subject as part of a degree program, you should refer to the relevant degree program outcomes and graduate attributes as they relate to this subject.
Subject Learning Outcomes (SLOs)
On successful completion of this subject the learner will be able to:
- Demonstrate an understanding of games in pure and mixed strategies.
- Explain the game theoretic concepts of uncertainty, information and strategic moves.
- Explain the characteristics and application of repeated games and associated trigger strategies.
- Apply mechanism design to business applications such as pricing and project management.
- Explain the various forms of game theoretic bargaining.
|Written Report||This assignment includes quantitative and analytical applications of concepts from almost the first half of the subject. This is an individual assignment||15%||Week 5||1, 5.|
|Essay||This is a post midterm assignment and covers all contents until week 10. This is a mix of conceptual, graphical and quantitative analysis.||15%||Week 10||1, 5.|
|Paper-based Examination (Closed)||Comprehensive final examination||40%||Final Examination Period||1, 2, 3, 4, 5.|
|Paper-based Examination (Closed)||Mid-semester Examination||30%||Week 6 (Mid-Semester Examination Period)||1, 5.|
- * Assessment timing is indicative of the week that the assessment is due or begins (where conducted over multiple weeks), and is based on the standard University academic calendar
- C = Students must reach a level of competency to successfully complete this assessment.
|High Distinction||85-100||Outstanding or exemplary performance in the following areas: interpretative ability; intellectual initiative in response to questions; mastery of the skills required by the subject, general levels of knowledge and analytic ability or clear thinking.|
|Distinction||75-84||Usually awarded to students whose performance goes well beyond the minimum requirements set for tasks required in assessment, and who perform well in most of the above areas.|
|Credit||65-74||Usually awarded to students whose performance is considered to go beyond the minimum requirements for work set for assessment. Assessable work is typically characterised by a strong performance in some of the capacities listed above.|
|Pass||50-64||Usually awarded to students whose performance meets the requirements set for work provided for assessment.|
|Fail||0-49||Usually awarded to students whose performance is not considered to meet the minimum requirements set for particular tasks. The fail grade may be a result of insufficient preparation, of inattention to assignment guidelines or lack of academic ability. A frequent cause of failure is lack of attention to subject or assignment guidelines.|
For the purposes of quality assurance, Bond University conducts an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Students must check the [email protected] subject site for detailed assessment information and submission procedures.
Policy on late submission and extensions
A late penalty will be applied to all overdue assessment tasks unless an extension is granted by the subject coordinator. The standard penalty will be 10% of marks awarded to that assessment per day late with no assessment to be accepted seven days after the due date. Where a student is granted an extension, the penalty of 10% per day late starts from the new due date.
Policy on plagiarism
University’s Academic Integrity Policy defines plagiarism as the act of misrepresenting as one’s own original work: another’s ideas, interpretations, words, or creative works; and/or one’s own previous ideas, interpretations, words, or creative work without acknowledging that it was used previously (i.e., self-plagiarism). The University considers the act of plagiarising to be a breach of the Student Conduct Code and, therefore, subject to the Discipline Regulations which provide for a range of penalties including the reduction of marks or grades, fines and suspension from the University.
Feedback on assessment
Feedback on assessment will be provided to students within two weeks of the assessment submission due date, as per the Assessment Policy.
If you have a disability, illness, injury or health condition that impacts your capacity to complete studies, exams or assessment tasks, it is important you let us know your special requirements, early in the semester. Students will need to make an application for support and submit it with recent, comprehensive documentation at an appointment with a Disability Officer. Students with a disability are encouraged to contact the Disability Office at the earliest possible time, to meet staff and learn about the services available to meet your specific needs. Please note that late notification or failure to disclose your disability can be to your disadvantage as the University cannot guarantee support under such circumstances.
Additional subject information
A peer-evaluation system will be used in this subject to help determine the individual marks for all group assessments. As part of the requirements for Business School quality accreditation, the Bond Business School employs an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
An introduction to the basic elements of games such as strategies and payoffs. Aspects of games and information asymmetry such as signalling and screening devices are also introduced.
The concept of a Nash Equilibrium is considered in detail. The successive elimination of dominated strategies is also examined. In addition concepts of multiple equilibria and best response functions are discussed.
The use of multi-stage games is explained as well as the conditions under which a first-mover-advantage applies. A variety of applications using the extensive form representation of a game are considered to demonstrate the concept of a subgame perfect equilibrium.
Mixed strategies with players randomising their moves may sound somewhat counter intuitive, however, this is a very important concept within game theory. An opponent’s indifference property of mixed strategy equilibria is examined.
Expected utility theory can be used to consider risk-averse decision-makers. The various issues associated with imperfect information such as screening and signalling are explored. Also, the circumstances under which a separating equilibrium or a pooling equilibrium may emerge are examined.
The incentives that influence players to manipulate the rules of the game are examined. The credibility problem with regard to commitment, threats and promises is also considered as well as various ways of gaining or losing credibility.
For economists, repeated games without a predetermined length are particularly appealing since they provide a framework that is suitable for analysing oligopolistic interactions. The circumstances under which a grim strategy can support a collusive equilibrium is explored.
Basic game structure is considered with all possible solutions in the situations of prisoner’s dilemma. These are mainly in terms of repetitions (finite, infinite, games of unknown length and general theory applications), penalties and rewards and leadership aspects. In addition, some real-world dilemmas and their solutions are also discussed. The real world examples may include Governments Competing to Attract Business; Labour Arbitration; Evolutionary Biology and Price Matching.
The Principal-Agent problem is considered, including situations under which a principal can offer the agent an optimal contract when the principal does not have full information. The participation constraint and the incentive compatibility constraint are also considered.
The concept of brinkmanship is examined by applying game theory to the Cuban Missile Crisis. This provides a good example of game theory where the player is uncertain as to what type or nature of the competing player.
Game theory’s cooperative and the non-cooperative approaches to bargaining are explored, as is the traditional Nash axiomatic approach to bargaining. This approach has been widely used by labour economists looking at the relationship between employers and unions.