In addition to Expected Utility as the method of coping with uncertainty in decision making, the course introduces the main concepts of game theory and illustrates how it can be applied. Game theory is concerned with decision making in social and strategic interaction and is presently the dominating method in all social sciences, particularly in business economics. What game theory provides are tools to (formally) represent strategic interactions, the “game forms”, and solution concepts prescribing for all interacting parties what to choose. The course introduces the main concepts and tools of game theory and applies them to actual management tasks with and without strategic interaction. Thus the course will specify concepts such as strategies, payoffs, and information conditions in static and dynamic games. In addition to standard game paradigms (board games, market games, etc.), specific applications try to capture special management problems like corporate governance, auditing, mergers and acquisitions, termination of joint ventures, etc.

Course material: J. Watson, “Strategy”, Norton (latest edition) + handouts

Handouts and other supplementary material (distributed via the web page of the course)