Dept. of Finance, Economics and Quantitative Methods
MBA 698A: ECONOMIC GAMES
Spring 2006
Dr. Don Ross
e-mail: dross@commerce.uct.ac.za
website: http://www.uab.edu/philosophy/ross.html
This course introduces students to the logic of game theory, in the context of selected topics in the theory of industrial organization. The focus is applied rather than abstract. That is, students will not be expected to learn any mathematics or to design and solve formal games; instead, the emphasis will be on applying game-theoretic logic to generic business issues, studied as cases. These issues are:
- competitive pricing strategy
- pre-emptive capacity expansion
- capacity reduction in declining markets
- product innovation
- process innovation
- market entry and deterrence
- competition policy
In addition, we will learn how game theorists model everyday human interaction, oligopolistic markets, bargaining, contract setting, and the design of auctions.
Pankaj Ghemawat, Games Businesses Play. MIT Press.
John McMillan, Games, Strategies and Managers. Oxford University Press.
Students will also consult Don Ross, `Game Theory’, in the online Stanford Encyclopedia of Philosophy, http://plato.stanford.edu/entries/game-theory .
Course structure and assignments
The course will begin with a lecture component, based on the Ross text above. At the end of this part, students will write an in-class on comprehension of the material, worth 15% of the final grade.
The Ghemawat text is the source of our full cases. At the beginning of the course, students will be divided into six groups. Each group will be responsible for presenting one case. (But all students are expected to read each case.) Groups are expected to collect additional data, going beyond the text, that are relevant to the cases for which they are responsible. (This could consist of detail on the case itself not discussed by Ghemawat, or of outlines of other, related, cases.) Groups should prepare presentations of 45 minutes; the second hour of each class will involve general discussion led by the professor. Group presentations will bee assessed, and each student’s group mark will constitute 30% of his or her final grade.
Each group will also research (on the Internet) and report on one mini--case during the year that illustrates a theoretical principle studied in class while we are reading McMillan on market structure, bargaining, contracting and auctions. These cases will be assigned, and will be worth 20% of each student’s grade.
Each student will also prepare a term report, due at the end of the course. This will be an (approximately) 15-page (double-spaced) report on and analysis of a new case, similar to one taken up in class. The professor will assist students in finding cases. Further details on the nature of the term report assignment will be given in class. The term report will constitute 35% of the final grade. There will be no final examination.
Jan. 5: Introduction
Jan. 12: Background lectures pt. 1. Text: Ross
Jan. 19: Background lectures pt. 2. Text: Ross; McMillan Part 1
Jan. 26: Background lectures, pt. 3. Text: Ross
Feb. 2: Background lectures, pt. 4. Text: Ross
Feb. 9: Test
Feb. 16: First and second mini-case presentations. Text: McMillan, Part 2
Feb. 23: Third and fourth mini-case presentations. Text: McMillan, Part 3
March 2: Fifth and sixth mini-case presentations. Text: McMillan, Part 4
March 9: First case presentation. Case: Ghemawat, ch. 2
March 16: Second case presentation. Case: Ghemawat, ch. 3
March 23: Third case presentation. Case: Ghemawat, ch. 4. *Class will be re-scheduled
March 30: Spring break
April 6: Fourth case presentation. Case: Ghemawat, ch. 5
April 13: Fifth case presentation Case: Ghemawat, ch. 6 *Class MAY be re-scheduled
April 20: Sixth case presentation. Case: Ghemawat, ch. 7