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Game Theory and Incentives in Business

Spring 2009 MBA Course

B8299-014: Game Theory and Incentives in Business

W - Full Term, 02:15PM to 05:30PM
Location: URI 330

Instructor: Bogachan Celen; Paolo Siconolfi


This is a course on game theory and its application to business. The course aims to provide the students with the basic tools of game theory, and apply them to business situations and cases. Game Theory is concerned about how economic entities make decisions when their actions affect others, and when they know that others' actions affect them.  Most, if not all, of the business situations involve strategic interactions where the faith of individuals are interdependent. Game Theory provides us with a methodology to identify optimal strategies and predict the outcomes of strategic interactions. In this course we will focus on the following topics among others: Contracts and Incentives (Moral Hazard, Adverse Selection); Auctions; Dynamic Price Competition and Tacit Collusion; Entry, Accommodation and Exit; Information and Strategic Behavior (Reputation, Limit Pricing, Predation); Bargaining (War of Attrition, Hold-up Problem.)