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2015/2016  BA-BHAAI1042U  Introduction to Strategic Thinking

English Title
Introduction to Strategic Thinking

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor - Dr Juliana Kozak Rogo, University of British Columbia
    Patricia Plackett - MPP
Main academic disciplines
  • Organisational behaviour
  • Strategy
  • Economics
Last updated on 10/08/2017
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Understand the importance of competitive and cooperative factors in a variety of decision problems.
  • Demonstrate a thorough knowledge of key concepts and theoretical perspectives related to game theory.
  • Provide instructive examples of strategic interaction among economic agents.
  • Formalize a strategic situation as a well-defined game.
  • Analyze and apply solution techniques to a wide variety of games and applications.
Course prerequisites
No prerequisites.

Useful background: Students should be familiar with general functional notation, graphical analysis and algebraic manipulation.
Prerequisites for registering for the exam
Number of mandatory activities: 1
Compulsory assignments (assessed approved/not approved)
Mandatory Mid-term Assignment: Assignment involving the theory and applications of sequential and Simultaneous move games taking place in Class 6.
Examination
Introduction to strategic thinking:
Exam ECTS 7.5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer
Aids allowed to bring to the exam Limited aids, see the list below:
  • Written sit-in-exam on CBS' computers
  • Allowed dictionaries
  • Additional allowed aids, please see the list below
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Description of the exam procedure

* Exam aids for 4-hour written exams: Language dictionaries and MS Office calculators.
Course content and structure

Most real-world decisions are not made in isolation, but involve interaction with others. This course studies the competitive and cooperative behavior that results when several parties with conflicting interests must work together and aims to provide you with tools and models used in Game Theory.  It emphasizes the role of conflicting or shared goals, timing, private information and its manipulation in determining outcomes. Game Theory allows modeling strategic interactions and developing an understanding of how agents behave and how they should be advised to behave in such situations.

 

Ideas such as dominance, backward induction, Nash equilibrium, commitment, credibility, asymmetric information, adverse selection, and signaling are discussed and applied to games played in class and to examples drawn from economics, business, marketing, politics and elsewhere.

 

This course introduces some of the game theory’s main topics and analytic tools, with an emphasis on gaining a practical understanding. At the end of the course you should be able to formalize a strategic situation and develop solution concepts to analyze and solve a wide variety of games and applications, understanding the assumptions underlying these concepts, as well as their strengths and limitations.

 

There will be both a Preliminary Assignment and a Mandatory Mid-term Assignment. The Preliminary Assignment will consist of exercises comprising strategic situations (e.g., “Sealed-Bid Auction”, “Flag Removing Game” and “Monk Challenge”) emphasizing the difference between simultaneous and sequential games as well as the notion of common knowledge of rules. The Mid-term Assignment will consist of various problems and short-answer questions related to Sequential and Simultaneous Move Games including, Nash Equilibrium, Dominance, Best Responses, Subgame Perfect Nash Equilibrium and Rationalizability. 
Teaching methods
Besides lectures, the course will rely on multiple teaching approaches such as in-class-conducted experiments, practice problems, exercises and readings. All sessions are interactive.
Further Information

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.

 

The timetable is available on http://www.cbs.dk/uddannelse/summer-university-programme/courses.
Expected literature

A. Dixit, S. Skeath & D. Reiley.Games of Strategy, 3rd Edition (W.W. Norton & Co. 2009). Chapters 1-11 (445 pages). Only the on-line exercises required.

 

Various other resources will also be utilized, including newspaper clippings and research articles which focus on various issues related to Game Theory. Examples of these resources are given below.

 

Jackson, Matthew O., A Brief Introduction to the Basics of Game Theory (December 5, 2011). Available at SSRN: http://ssrn.com/abstract=1968579 or http://dx.doi.org/10.2139/ssrn.1968579 (21 pgs).

 

The Path from Research to Human Benefit (2003). National Academy of Sciences. (9 pgs).

 

Mullins, J. Checkers Solved After Years of Number Crunching. New Scientist Tech. July 2007. Retrieved from: http://www.newscientist.com/article/dn12296-checkers-solved-after-years-of-number-crunching.html.

 

Colvin, G. Is game theory real? Ask Bill Belichick's Patriots. Fortune Magazine. Retrieved from http://archive.fortune.com/magazines/fortune/fortune_archive/2005/10/31/8359159/index.htm.

 

Harford, T. World Cup Game Theory. What Economics Tells us about Penalty Kicks? Slate, June, 2006. Retrieved from: http://www.slate.com/articles/arts/the_undercover_economist/2006/06/world_cup_game_theory.html

 

Bagwell, K. and G. Ramey (1991), “Oligopoly Limit Pricing,” Rand Journal of Economics, 22, 155-72.

 

Borenstein, S. and A. Shephard (1996), “Dynamic Pricing in Retail Gasoline Markets,” Rand Journal of Economics, 27, 429-451.

 

Cho, I–K. and D. Kreps (1987), “Signalling Games and Stable Equilibria” Quarterly Journal of Economics, 102: 179-221.
Last updated on 10/08/2017