MG205: Competitive Strategy and Game Theory

Course Content

This course is an introduction to strategic thinking applied to managerial situations. By drawing simultaneously on the language and tools of game theory, economics and management, it develops a coherent and logical framework that helps analyse real-life business situations.

Following an introduction to game theory, oligopoly theory, and the psychology of intuitive decision-making, the course examines concrete business situations, including firm entry, research and development, and the design of markets. An emphasis will be placed on firm asymmetries, and the emergence of core competencies. Real-life case studies will then be analysed using the tools studied in the lectures.

Topics covered include;

• Introduction to Game Theory
• Models of Competition
• Fairness and Bargaining, Experiments in Strategic Interaction
• Strategic Communication, and Persuasion
• Dynamic Strategies,  Long-term Interactions
• Describing and Analysing Market Structure: Why the Big gets Bigger
• Entry and Entry Deterrence. Vertical Relations.
• Research and Development
• Technology Adoption.
• Strategies for the Information Economy
• Market Design (for E-commerce)

Course Outcomes

The course provides a valuable complement to courses in business and corporate strategy and a less technical treatment of tools originating from industrial organisation and game theory. The overall aims of the course are to;

• Develop a way of thinking about strategic interactions in real life and in business situations.
• Provide a formal, analytical framework through game theory to study aspects of co-operation, co-ordination, differentiation and negotiation.
• Adapt the above framework and incorporate other basic economic and behavioural insights to evaluate good business decisions.
• Develop a clear analytical way of thinking about how firms could create, sustain and appropriate value.
• Provide cases and other real life examples to illustrate the usefulness and complexities of applying theories.

The course does not require extensive prior knowledge of mathematics, but students should possess the willingness and interest to analyse real world problems using analytical methods and to acquire the tools necessary to do so.

____________________________________________________________________

Texts*

L. Cabral, Introduction to Industrial Organization, MIT Press (2000)
Dixit and Skeath, Games of Strategy, Norton (2004)

*A more detailed reading list will be supplied prior to the start of the programme

**Course content, faculty and dates may be subject to change without prior notice