Course: Strategic Behavior and Industrial Organization
A course for PGP students
Semester:
Credit:
Contact:
Office:
Email:
Office Phone:
III
3
Manaswini Bhalla
Faculty Block C, 202
manaswinib@iimb.ernet.in
080-26993744
Objectives
This course is an introductory course to basic concepts in the field of Industrial
Organization and Game Theory. This course will enable you to think strategically You
will learn to use Game Theory to understand the functioning of firms and predict optimal
strategy under strategic environments like competition, auctions, mergers and cartels.
WARNING: This course will challenge you to think. You can’t escape that! You will be
trained to think strategically. All efforts will be made to discourage rote learning. This
would imply that exams would be based on classes but not identical to them.
On completion of the course the student will be:

To understand the basic concepts of Game Theory and its applications in the
industry

For each topic we will discuss case or real life situations that exemplify the
underlying concept(s).

Able to apply game theory to issues seen in real life within and outside the
industry
Code of Conduct
There is absolute no tolerance for scholastic dishonesty. If you are caught cheating in
the exam you would be given the lowest grade possible.
All four assignments will be group assignments to encourage learning and group
thinking. However, each group can have no more than two members. Each group will
submit only one report per assignment with the names of members mentioned above.
You must not discuss the assignment with a member from another group. Any similarity
in presentation, approach etc in reports will be punished harshly.
Main Text



Strategy: An Introduction to Game Theory, Joel Watson (W)
The Art of Strategy: A Game Theorists Guide to Success in Business and Life,
Dixit and Nalebuff (DN)
Course Binder
Attendance:
Minimum attendance is 75% (15 class sessions out of 20). Those who fall below this
threshold will be subjected to half a grade point drop.
Evaluation
Final Exam
Midterm Exam
Take Home Group Assignments (4)
:
:
:
30%
30%
40%
Class Schedule
Session
No.
1.
2.
Topics
Readings
Introduction to Industrial
Organisation and Game
Theory.
Course Outline and
Syllabus
Game Theory and Business
Strategy: Oberholzer-Gee, Felix;Yao,
Game Theory:
Simultaneous Games,
Mixed Strategies
Ch 3,5, 6,7, 9,11 – W
Dennis
Business as a War Game: A
Report from the Battlefront
Fortune 30 September 1996 (Vol.
134 No. 6)
Exuberance Is Rational , New York
Times Magazine, 11 February
2001
Unhaggle: Putting Customers in
the Driver's Seat Neil
Bendle , Sarah Chiu , Justin Leung
Assignments
3.
Game Theory: Sequential
Games
Ch 14, 15- W
Warner Bros. Pictures: The Harry
Potter Dilemma Neil Bendle , Matt
Boswick
Prepare
Worksheet for
Bluff Game
Predicting Your Competitor's
Reaction, Coyne, Kevin P.;Horn,
John
4.
Game Theory: More
5.
6.
Oligopoly Issues
Product Differentiation
7
Price Discrimination
+Bundling
8
9.
Durable Goods Pricing
Auctions
10.
11
Internet Pricing/Auctions
Signaling Costs
The Art of the Save, for Goalie
and Investor, Patricia Cohen
New York Times, March 1, 2008
Competition and Product
Variety: Brandenburger
and Krishna, HBR
13.
Coordination v/s
Coordination
Simulation: In Class
Debrief + Cartels
Chapter 4
McAfee
Bundling, HBR, Vijay Krishna
and Adam Bradenburger
+ Brief History of Browser Wars
Toy Game, Brandenburger
Auction experiment
Netflix – HBR
Case
Signaling game simulation
12.
Prepare
Worksheet for
Dynamic Pricing
Game
Simulation: Competitive
Dynamics and Wintel
Duopont
Titanium
Dioxide
Business
14.
Cartels
Ch 22- W
Why We're So Nice: We're Wired
to Cooperate New York Times
Natalie Angier 23 July 2002
15.
Product Innovation
Product Innovation in the Private
Branch Exchange Industry
Airbus vs. Boeing (A)
Casadesus - Masanell,
Ramon;Mitchell, Jordan;Voigt,
Erich Alexander
16.
Strategic Entry
Judo in Action
Corts, Kenneth S.;Freier, Debbie
17.
Strategic Entry
18.
War of Attrition
19, 20
Social Learning and
Information Cascades
1. Product Proliferation and
Preemption:Brandenburger
and Krishna, HBR
2. The Ready To Eat
Breakfast Cereal Industry:
Product Proliferation and
Preemption
1. Entry and Deterrence in British
Satellite Broadcasting
1. Following the Herd- Pierre
Lemieu
2. Informational CascadesChapter 16,
Networks, Crowds, and
Markets: Reasoning about
a Highly Connected World.
By David Easley and Jon
Case Study: Judo
Economics,
Adam
Bradenburger,
Vijay Krishna
Prepare
Worksheet for
Urn Game
Simulation on
Informational
Cascades