ME206: Mastering Strategy with Game Theory

In business, politics, and everyday life, success depends not only on your own decisions but on anticipating and influencing the choices of others. Game theory provides a systematic framework for such strategic thinking, allowing you to analyse interactions where outcomes depend on the combined actions of multiple players.

This course introduces the science of strategic decision-making. You will learn to identify the key elements of any strategic situation: who the players are, what actions they can take, what information they have, and how they value different outcomes. Building on these foundations, you will explore core concepts such as Nash equilibrium, the power of commitment, and the principles of effective mechanism design, all with minimal mathematical prerequisites but strong emphasis on conceptual insight.

The course moves from basic models to more sophisticated scenarios, each grounded in real-world applications. You will examine how telecoms spectrum auctions raised billions, why Brexit negotiations unfolded as they did, how matching algorithms assign doctors to hospitals and support kidney exchanges, and how AI agents learn to interact strategically.

Our approach emphasises intuition over technical proofs. Through iconic examples such as the Prisoner’s Dilemma and through structured case analysis, you will see why cooperation can arise from self-interest, when randomness becomes a rational strategy, and how apparently “irrational” behaviour may be optimal.

By the end of the course, you will be able to think more clearly and systematically about strategic situations in any context: equipped with frameworks that are valuable across economics, business, politics, and technology.

Prerequisites: An introductory course in probability or statistics and experience with basic linear algebra (matrix-vector multiplication). An interest in strategic thinking is essential, but no advanced mathematics is required.

Level: 200 level. Read more information on levels in our FAQs

Fees: Please see Fees and payments

Lectures: 36 hours

Classes: 18 hours

Assessment: A mid-session exam (40%) and a final exam (60%). 

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU)

Please note: Assessment is optional but may be required for credit by your home institution. Your home institution will be able to advise how you can meet their credit requirements. For more information on exams and credit, read Teaching and assessment

This course is for anyone interested in how strategic choices interact in business, economics, and society. Students with quantitative backgrounds will find powerful modelling tools; those from management and social sciences will learn to apply mathematical reasoning to real strategic problems. The focus is on insight and clear conceptual structure, not on technical complexity.

Understanding of key concepts. By the end of the course, students will be able to:

• Analyse strategic situations by identifying players, strategies, and anticipating others’ actions.
• Recognise how incentives shape behaviour and outcomes.
• Understand how the rules of a game influence strategic possibilities and results.
• Evaluate the role of information, including how common knowledge affects decision-making.
• Explain classic paradoxes in multi-player settings, such as free-riding, the Tragedy of the Commons, congestion effects, and preference cycles (Condorcet paradox).

The design of this course is guided by LSE faculty, as well as industry experts, who will share their experience and in-depth knowledge with you throughout the course.