MBA Game Theory for Strategic Advantage

Class 1:Introduction
Dominant strategies · Prisoners’ dilemma · Application: Tobacco Industry
Class 2:Rationality
Dominated strategies and iterated elimination of dominated strategies · Allocentric thinking · Application: Product Positioning and Rational Cascades
Class 3:Nash Equilibrium
Never best responses and rationalizability · Simultaneous-moves games · Beliefs and best responses · Nash equilibrium concept · Prototypical games · Application: Printer Industry
Class 4:(Un)predictable Outcomes
Focal points · Population games and evolutionary stability · Mixed strategies · Zero-sum games · Applications: Technology Adoption, Market Congestion, and Poker
Class 5:Influencing Outcomes
Strategic Pre-Commitments (changing actions, payoffs, technology, order of moves, and enabling retaliation) · Applications: Price-Match Guarantees, MFN Clauses, Production in Teams, Sports
Class 6:Strategic Trade Policy
Application Lecture: Strategic Moves in International Business
Class 7:Bargaining (Case-Based Lecture)
Added Values · Nash bargaining solution · Application: Airplane Purchase Negotiations
Class 8:Backward Induction
Sequential-move games · Sub-game perfect equilibrium · Credible threats · Experimental evidence · Application: Timing of a Product Launch
Class 9:Market Entry and Competitor Analysis (Case-Based Lecture)
Entry game · Competitor analysis · Application: Entry in the Airline Industry
Class 10:Wars of Attrition
Two-period version · Infinite horizon version · Strategic effects · Application: Exit Decisions in Markets
Class 11:Team Presentations: Project Proposals
Students present their final-project proposals
Class 12:Dynamic Price Competition
Price wars · Softening competition · Application: In-Class Loyalty Program Game
Class 13:Introduction to Repeated Interaction
Infinitely repeated games · Grim-trigger strategies · Credibility of punishments · Applications: Impossibility of Sustaining Cooperation in Cartels
Class 14:Long-Run Relationships (Case-Based Lecture)
Transaction costs · Relational contracts · Hold-up problem · Reputations · Application: Buyer-Supplier Relationships in the Auto Industry
Class 15:Application: Tacit Coordination (Case-Based Lecture
Imperfect public monitoring · Strategic pre-commitments · Strategic effects of transparency · Application: Closed-Door Large Purchases
Class 16:Introduction to Auctions
Typical formats and information structures · In-class bidding · Application: Destabilizing Bidding Rings
Class 17:Bidding in Auctions
Equilibria in first-price and second-price auctions · Revenue equivalence · Reserve prices · Optimal Myerson auctions · Bidding with common values and winner’s curse
Class 18:Online Auctions
Formats used online · Bidding in generalized first-price and second-price position auctions · Reserve prices · VCG Mechanisms · Application: The Strategic Value of Marketing
Class 19:Topics in Market Design
Medical match game · Gale-Shapley algorithm · FCC auctions · Application: Bidding at Sloan
Class 20:Learning and Signaling
Signaling games · Bayesian persuasion · Application: R&D Project Reporting
Class 21:Credibility and Reputation
Strategic irrationality · Dynamic signaling and reputations · Application: Consumer Scores and Privacy
Class 22:Application: Cold War Politics
Brinkmanship as a strategic move
Class 23:Team Project Presentations
Class 24:Team Project Presentations