23506 Strategic Decision Making and Game Theory
Warning: The information on this page is indicative. The subject outline for a
particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2025 is available in the Archives.
Credit points: 6 cp
Subject level:
Undergraduate
Result type: Grade and marksThere are course requisites for this subject. See access conditions.
Anti-requisite(s): 23592 Game Theory
Description
This subject introduces students to the range of concepts and methods to study strategic behaviour, i.e. decision making in an interactive environment. Students learn surprisingly simple but very powerful tools from an exciting field of “game theory”. These tools allow students to understand the logic of business, economic, and social decisions in a competitive environment. Among many applications that students explore in the subject are emergence and sustainability of trust and social norms, firms’ production decisions, bargaining over limited resources.
Subject learning objectives (SLOs)
| 1. | solve problems using concepts of game theory |
|---|---|
| 2. | apply game theory to analyze a wide range of business and economic behaviours |
| 3. | use specific classes of games to analyse business strategies and policy making |
| 4. | analyze strategic situations in business |
Contribution to the development of graduate attributes
Game theory focuses on strategic decision-making. This subject will equip students with a range of techniques that will improve their ability to analyze and solve economic problems. It encompasses models of cooperation and conflict.
This subject contributes to the development of the following graduate attribute(s):
- Intellectual rigour and innovative problem solving
- Professional and technical competence
Teaching and learning strategies
This subject is presented in lecture and tutorial format. Details of our teaching and learning strategies are described below.
Students’ Preparation for Learning: Students are expected to work on problem sets before tutorials to identify the gap between their own reasoning and the correct reasoning in the tutorial. Students are also asked to participate in online experiments before lectures to compare their intuitive reasoning and the game theoretical reasoning.
Lectures: Essential concepts are presented in lectures. The lecturer also shows how those concepts can be applied to practical problems by using examples. Students are expected and encouraged to discuss potential applications of the concepts during lectures. When there was an online quiz just before a lecture, each question and the solution will be explained with a great emphasis on derivation and intuition, and students get feedback on the reasoning behind their mistakes. When a new concept was introduced in the lecture, the result of relevant online experiments will be discussed. Students get feedback on their decisions in the exepriments; they learn how their decision making can be improved by game theoretical reasoning.
Tutorials: After every lecture, a problem set is posted and students are expected to try it before the next tutorial. There are three types of questions; (i) the first type is designed to test understanding of concepts; (ii) the second type improves the skill of numerical problem solving; (iii) the third type is to develop the skill to apply abstract concepts to practical problems. In the tutorial, the tutor explains how to solve those questions step by step and encourage students to discuss their approaches.
Online learning: All course materials are accessible by online. Students are also asked to take online quizzes as a part of the assessment task. The submitted answers will be automatically evaluated by the online system and students will learn the score and the correct solutions as feedback. Students are also encouraged to participate online experiments so that they can identify the difference between their intuitive reasoning and the game theoretical reasoning. The results of the experiments will be discussed during later lectures.
Content (topics)
- Strategic decision
- Normal form games
- Best response
- Dominance
- Nash equilibrium
- Mixed strategies
- Extensive form games
- Subgame perfect equilibrium
- Bargaining games
- Repeated games
- Applications to strategic situations
Assessment
Assessment task 1: Online Assignment (Individual)
| Intent: |
|
|---|---|
| Objective(s): | This addresses subject learning objective(s): 1 and 4 |
| Weight: | 50% |
| Length: | 5-10 questions per quiz |
| Criteria: |
|
Assessment task 2: Final Exam (Individual)
| Objective(s): | This addresses subject learning objective(s): 1, 2, 3 and 4 |
|---|---|
| Weight: | 50% |
| Criteria: |
|
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Recommended texts
No required textbook
References
Dixit, A., Reiley D., Skeath, S. Games of Strategy, 4th Edition, 2015, Norton