Code:
EC364
BRIGHTON BUSINESS SCHOOL
MOULSECOOMB MODULAR SCHEME
TITLE:
Game Theory in Economics, Finance and Business
LEVEL:
3
CREDIT RATING:
20
SUBJECT AREA:
Economics
MODULE TYPE:
Double
SEMESTER OFFERED:
1&2
Course(s) for which module is acceptable and status in course:
BA(Hons) Business Studies - OPTIONAL
BA(Hons) Business Management - OPTIONAL
BA(Hons) Business Studies/Management with Marketing – OPTIONAL
BA(Hons) Business Studies/Management with Finance - OPTIONAL
BA(Hons) International Business – OPTIONAL
BA(Hons) Business Management/Administration (top-up) - OPTIONAL
BA(Hons) Accounting and Finance – OPTIONAL
LLB(Hons) Law with Business – OPTIONAL
BSc(Hons) Finance and Investment – OPTIONAL
BSc(Hons) Economics and Finance – OPTIONAL
BSc(Hons) Mathematics with Finance – OPTIONAL
BSc(Hons) Mathematics with Business – OPTIONAL
PRE-REQUISITES: eventually it is anticipated that these will be
specified in terms of learning outcomes; in the interim they should
be specified in terms of other module codes, or equivalent
EC161, EC282, EC180 or equivalent
AIMS:
The course aims to introduce some basic analytical concepts of game theory and to apply them to
the field of economic, financial and business analysis. This will deepen students' insight into
strategic thinking and enhance their understanding of human behavior in different contexts.
LEARNING OUTCOMES:
On completion of this module a student should be able to:
Subject specific:
 demonstrate an understanding of the nature of game theory and its relationship to strategic
thinking;
 define and acknowledge the main concepts of game theory and their interrelationship;
 explain how economic, financial and business performance fits into a strategic setting in the
sense of game theory;
 apply the tools of game theory to issues of market structure and organizational design;
 demonstrate awareness of strengths as well as limitations of game theory.
Cognitive:
 Demonstrate more critical and analytical thinking, and to recognise where the particular skills or
ideas learned on the course may be relevant to solving a new problem.
 Have skills in handling monetary data and in presenting ideas
 Develop abilities to manage own learning.
 Demonstrate inter-personal skills, including oral as well as written presentation skills.
CONTENT:
1.
Game theory: introduction
life, economics, finance and business seen as games
short history of game theory
2.
Game theory: concepts
players, moves and strategies
expected utility and payoff
matrix form and sequential form of games
equilibrium
maximin solution
dominant strategy
Nash equilibrium
subgame perfect equilibrium
backward induction
credibility
prisoners' dilemma game
signalling games
coordination game
assurance game
battle of sex game
chain-store paradox
iterated games
tit-for-tat
3.
Game theory: applications
oligopoly
property-rights
institutions
auctions
bargaining
trade policy
time-inconsistency in macroeconomic policy
moral hazard and insurance
adverse selection and credit rationing
takeovers
limit pricing and entry deterrence
cartels
principal-agent-problems
cooperation problems
international conflicts
TEACHING & LEARNING STRATEGIES:
Lectures:
Seminars:
Workshops:
20
20
0
Open Learning:
Self Study:
Assessment:
0
100
60
Total: 200
LEARNING SUPPORT:
a) Journals:
Corporate Governance: International Journal of Business in Society
Econometrica
European Business Review
European Economic Review
European Journal of Marketing
Games and Economic Behavior
International Journal of Game Theory
International Journal of Manpower
Journal of Economic Studies
Journal of Economic Theory
Journal of International Economics
Journal of Mathematical Economics
Management Decision
Management Science
Managerial Finance
Mathematical Social Science
Public Choice
Review of Economic Studies
Strategy and Leadership
Supply Chain Management: An International Journal
Theory and Decision
b) Books: Latest editions of ...
Axelrod, R.; The Evolution of Cooperation; Basic Books, Inc., Publishers
Bierman, H. S. and L. Fernandez; Game Theory with Economic Applications; Addison-Wesley
Binmore, K.; Fun and Games. A text on Game Theory; D. C. Heath & Co.
Carmichael, F.; A Guide to Game Theory; Prentice Hall
Dixit, A. and B. Nalebuff; Thinking Strategically; Norton & Co.
Fudenberg, D. and J. Tirole; Game Theory; MIT Press
Gibbons, R.; A Primer in Game Theory; Prentice Hall
Harrington Jr., J. E.; Games, Strategies, and Decision Making; Worth Publishers
Holt, C. A.; Markets, Games, & Strategic Behavior; Addison-Wesley
Montet, C. and D. Serra; Game Theory and Economics; Palgrave-Macmillan
Osborne, M. J.; An Introduction to Game Theory; Oxford University Press
Varian, H.; Intermediate Microeconomics. A Modern Approach; Norton & Co.
Watson, J.; Strategy. An Introduction to Game Theory; Norton & Co.
ASSESSMENT: include weighting of the various tasks
Students have to undertake an individual assignment and a final examination. The
weighting is as follows
Assignment: 50%
Examination: 50%
The assignment consists of a portfolio of four tasks spread over the whole year. The three
best results in each individual portfolio will be taken into account for the average
assignment mark.
Examination will be two hours.
BRIEF DESCRIPTION OF THE MODULE: this should be aimed at a nonspecialist audience to give an overview of the module (maximum 80
words)
This module is designed as an introduction into the realms of game theory, one of the most exciting,
stimulating and promising subjects in modern microeconomics, which is now also broadly applied in
philosophy, sociology, and political science among other fields. Applied to several topics of financial
and business analysis it will deepen and widen students' knowledge of economics, finance and
business as an ongoing strategic game to which game theory can provide an interesting and
relevant approach.
Area Examination
Board:
Economics
External
Examiner:
Matthias Klaes
Faculty:
Brighton Business
School
Site where
delivered:
Moulsecoomb
Module Writer(s):
Walter W. Heering
Date of First
Approval:
2003
Date of Last
Revision:
2011
Version Number
1