Universität Wien

040038 UK Strategic thinking in practice (2013S)

8.00 ECTS (4.00 SWS), SPL 4 - Wirtschaftswissenschaften
Continuous assessment of course work

Registration/Deregistration

Note: The time of your registration within the registration period has no effect on the allocation of places (no first come, first served).

Details

max. 50 participants
Language: English

Lecturers

Classes (iCal) - next class is marked with N

  • Monday 08.04. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 09.04. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 15.04. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 16.04. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 22.04. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 23.04. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 29.04. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 30.04. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 06.05. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 07.05. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 13.05. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 14.05. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 03.06. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 04.06. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Monday 10.06. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 11.06. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Thursday 13.06. 11:00 - 13:00 (Seminarraum 2 Hohenstaufengasse 9 1.Stock)
  • Monday 17.06. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 18.06. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5
  • Thursday 20.06. 11:00 - 13:00 (Seminarraum 2 Hohenstaufengasse 9 1.Stock)
  • Monday 24.06. 11:45 - 13:45 (Seminarraum 1 Hohenstaufengasse 9 1.Stock)
  • Tuesday 25.06. 13:00 - 15:00 Hörsaal 16 Hauptgebäude, Hochparterre, Stiege 5

Information

Aims, contents and method of the course

Motivation:

Everyone would agree that thinking strategically is important. Everyone knows that it is
essential to lead a business. And economics and game theory have a lot to say about this
subject! This course will be particularly useful to those who consider starting their own
business and take important managerial decisions to optimize their business's performance.
Economics analyzes your future business's place in the world. Who does your business
interact with? How does it interact with these dierent parties? When is it desirable
to cooperate and when does your business need to compete? How can your business
best place itself to prot from these everyday interactions? Game theory, particularly
over the past 40 years, has developed a variety of new tools that can aid managers and
decision-makers in general. It has been used by economists to consider alternative business
strategies, including their strengths and weaknesses, to study the likely outcomes of day-to-
day interactions and to formulate processes to ensure the best possible results. This course
will focus on these recent advances in economic theory and practice. It will provide an
integrated framework to deal with price formation, competition, contracting, ownership
and incentives, -- subjects that cover key economic principles and that are particularly
valuable for business.

Content:

The course will be split into two parts. The rst part is a series of lectures on game-
theoretic foundations of core economic principles and phenomena. It aims at providing an
integrated framework to deal with price formation, competition, contracting, ownership
and incentives. There will be a lot of simple stylized examples and real-world situations,
that we will discuss in the context of each specic topic of the course. The second (shorter)
part is presentations by students of their projects (see more details below).

Course Outline

1. Introduction and overview of the course. Some simple games: competition, coordination, and guessing

2. Decision-making
a) Individual decision-making
b) Cooperative decision-making
c) Strategic decision-making

(Framing decisions, identifying player roles, common decision-making pitfalls; sequential,
simultaneous and repeated games; examples and real-life situations)

3.Negotiations
a) Bilateral negotiations
b) Multilateral negotiations
c) Changing negotiations

(Price formulation in buyer-seller exchange, sharing costs, negotiations with a monopolist,
competition, scarcity and market power, hold-up problems)

4. Pricing
a) Mass market pricing
b) Strategic pricing
c) Informative pricing

(Simple and strategic pricing, strategic investment, tacit collusion, manipulating price sig-
nals)

5. Contracting
a) External contracting
b) Incentive contracting
c) Relational contracting

(Property rights, incomplete contracts, markets for ownerships, screening, incentives for
teams, committing to incentives, continuing the relationship)

Assessment and permitted materials

Assessment:

Assessment will be based on one midterm and one nal test (30% each) and on a project,
including written work and 30 min presentation in class (40%). The project should be
based on a real-world situation/precedent/business case that was described in press or in
economic books (see suggested reading section below). The task is to identify strategic
reasoning behind the chosen situation and to describe and analyze it formally in 4-10 pages
paper (identify players, sets of strategies, potential outcomes/payos; what game is this?
what are the incentives? are there "tensions" between incentives of dierent players? what
information do players have? what is a game-theoretic framework for the situation? is this
situation better represented by a sequential or simultaneous or repeated game? can you
identify an equilibrium of the game? was the theoretically predicted equilibrium played in
the actual situation? why/why not? is there a possibility of Pareto-improvement and how
could that be reached? etc.) This paper should then be presented in class, in the second
part of the course.

Pre-requisites:

The course will assume basic pre-requisites in microeconomics and familiarity with basic
concepts of non-cooperative game theory.

Minimum requirements and assessment criteria

Examination topics

Reading list

Suggested reading:

The main texts for the course are Joshua Gans (2005) "Core Economics for Managers "
and B. Nalebu and A. Brandenburger (1997) "Co-opetition".

For reference you can also use any introductory and other game-theory books, such as R.
Gibbons "A Primer in Game Theory", M. J. Osborne "An Introduction to Game Theory",
R. Myerson "Game Theory: Analysis of Conflict".

For inspiration in choosing a topic for your project the suggested reading is "The
Economist" (magazine) and books:

Steven D. Levitt , Stephen J. Dubner "Freakonomics: A Rogue Economist Explores the
Hidden Side of Everything"
Joshua Gans "Parentonomics: An Economist Dad Looks at Parenting"
Steven E Landsburg "The Armchair Economist: Economics and Everyday Life"
Adam M. Brandenburger "Co-Opetition : A Revolution Mindset That Combines Com-
petition and Cooperation : The Game Theory Strategy That's Changing the Game of
Business"

This may be supplemented by some additional readings as we proceed, which will be posted on my web page.

Association in the course directory

Last modified: Mo 07.09.2020 15:28