- Know the basic concepts and theorems of game theory, know algorithms and methods applied to solve business and managerial problems.
- Understand limits and conditions for applying each game solution concept.
- Have skills in the analysis of economic and managerial phenomena and processes using game-theoretic models.
- Know basic concepts of games and dominance. Solve games in dominance.
- Know basic concepts and theorems of Nash equilibrium. Find Nash equilibrium in pure and in mixed strategies in games.
- Know basic concepts of dynamic games. Solve dynamic games.
- Game definition and dominance1. Definition of simultaneous games. Basic elements of game in a normal form, games classification with examples. Prisoners dilemma: idea, analysis with 4 players with different preferences, basic rules of game theory. 2. Strict and weak dominance. Definition of strict and weak dominance, strict and weak dominated and dominating strategies. Game solution in dominating strategies. Game solution by eliminating dominated strategies. Reduced game. Hotelling positional game. Median voter theorem.
- Nash equilibrium in pure and in mixed strategies3. Nash equilibrium in pure strategies. Definition of best response. Definition of strict and weak Nash equilibrium. Coordination game and focal point. Property of pure strategy Nash equilibrium. Nash equilibrium search in matrix games and in games with continuous number of strategies. Bertrand model with a differentiated product, the game "investing". The relationship of dominance and Nash equilibrium. 4. Nash equilibrium in mixed strategies. Definition and interpretation of mixed strategies. Definition and interpretation of mixed strategy Nash equilibrium. Property of mixed strategy Nash equilibrium. Necessary conditions for mixing strategies. Mixed strategy Nash equilibrium search. Nash theorem. The game “rock-paper-scissors”, the game “family dispute”, the game “inspection”.
- Dynamic games5. Sequential games with perfect information. Definition of sequential games. Tree of the game and its elements. Perfect information. Backward induction as an approach to solve the game. Moving advantage. Zermelo's theorem: definition and game examples in accord with theorem. Games with commitment. The game "investor bank", the game "1066", the game "Duel". 6. Sequential games with imperfect information. Imperfect information and game tree. Definition of players’ strategy. Link between simultaneous and sequential games. Examples of games with imperfect information: the war of attrition. Subgames: definition, examples of subgames’ properties violations. Subgame perfect Nash equilibrium: definition and search algorithm. Link between backward induction and subgame perfect Nash equilibrium. Game “Matchmaker”. 7. Repeated games. Repeated games: definition and solution concept. Discount factor: definition and interpretations. The possibility of cooperation in finite-step repeating games based on the examples of the prisoner's dilemma and the matrix game with two equilibria. Strategies in infinitely repeated games. The possibility of cooperation in infinitely repeated games on the example of the prisoner's dilemma.
- Interim assessment (4 module)0.2 * Active work at classes + 0.4 * Exam + 0.2 * Microtest + 0.1 * Notes after lectures + 0.1 * Self-study work
- Webster, T. J. (2014). Analyzing Strategic Behavior in Business and Economics : A Game Theory Primer. Lanham, MD: Lexington Books. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=748851
- Binmore, K. (2007). Playing for Real: A Text on Game Theory. Oxford University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.oxp.obooks.9780195300574
- Mueller, D., & Trost, R. (2018). Game Theory in Management Accounting : Implementing Incentives and Fairness. Cham, Switzerland: Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1601764
- Von Neumann, J., & Morgenstern, O. (2007). Theory of Games and Economic Behavior : 60th Anniversary Commemorative Edition (Vol. 60th anniversary ed). Princeton: Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=509721