1
Lecture 1 Game Plan
Introduce the course
Logistics / expectations
More examples
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Prepare for your exams
Study with the several resources on Docsity
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Guidelines and tips
Prepare for your exams
Study with the several resources on Docsity
Earn points to download
Earn points by helping other students or get them with a premium plan
Introduction-Game Theory For Managers-Lecture Slides, Slides of Game Theory
Content of Game Theory for Managers course includes ratiinality, prisoner dilemma, Loyal servant, assurance, credibility, stratigic subtitutes, entry, brinkmanship, negotiation, auctions, signaling, reputation etc. This file contains: Introduction, Course, Logistics, Expectations, Example, War, Animate, Object, Game, Theory
Typology: Slides
2011/2012
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Lecture 1 Game Plan^ ^ Introduce the course^ ^ Logistics / expectations^ ^ More examples
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What are Games? “No Man is an Island, Entire of Itself”^ - John Donne, 1624
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What is Game Theory?^ ^ Study of rational behavior in situations in whichyour choices affect others & their choices affectyou (so-called “games”)^ ^ Bad news:^ Knowing game theory does not guarantee winning^ ^ Good news:^ Framework for thinking about strategic interaction
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Games We Play^ ^ Driving^
coordination ^ Penalty Kicks^
hunter & hunted ^ GPA trap^
prisoner’s dilemma ^ Doing the dishes^
war of attrition ^ Mean professors^
commitment ^ Group projects^
free-riding ^ Dating^
hidden information
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Why Study Game Theory?^ Because the press tells us to…^ “As for the firms that want to get their hands on a sliver ofthe airwaves, their best bet is to go out first and hirethemselves a good game theorist.”^ The Economist
,^ July 23,1994 p. 70 “Game Theory, long an intellectual pastime, came into itsown as a business tool.”^ Forbes , July 3, 1995, p. 62. “Game theory is hot.”^ The Wall Street Journal
, 13 February 1995, p. A14docsity.com
Why Study Game Theory?^ Because business leaders tell us to:^ ^ Raymond W. Smith (Bell AtlanticChairman during 1990s)^ “At Bell Atlantic, we’ve found that the lessonsof game theory give us a wider view of ourbusiness situation and provide us a morenimble approach to corporate planning.
We call this system, quite simply, the ‘managethe business’ process.” -- in^ “Business as war game: a report from thebattlefront”,^ Fortune, Sep. 1996
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Why Study Game Theory?^ ^ Because we can formulate effective strategy…^ ^ Because we can predict the outcome ofstrategic situations…^ ^ Because we can select or design the best gamefor us to be playing…
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Course Information^ ^ Materials on Sloan class server
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Prerequisite: 15.010^ ^ In particular, I assume that you arevery comfortable^ ^ representing games with payoff matrixand/or decision tree^ ^ computing reaction curves^ ^ computing equilibrium given payoffmatrix and/or decision tree
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Team Assignments^ Target 3-4 students per team^ 1.^ Problem Set^ 2.^ Strategy Memo^ 3.^ Real-World Application
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Group Assignments^ 1. Problem Set
: Qwest Bond Swap “Design a debt tender offer tominimize the risk of bankruptcyand maximize shareholder equity.”
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Group Assignments^ 3.^ Real-World Application^ “ From your analysis, develop strategyadvice for one of the players in thegame or for a party interested in theoutcome.”^ a.^ Mixed Strategies.^ b.^ Sequential / Repeated Games.^ c.^ Strategic Moves.^ d.^ Information.
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Online Games ^ Six online games, prior to:^ ^ Lectures 2,3,4,5,9,10 ^ Participate^ by midnight
before lecture
^ No preparation: 5-15 minutes to play ^ Results revealed in class ^ Graded for participation only
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