Introductory description

This is an elective module available for WBS and non-WBS students.

The principal module aims are:

1. To develop students' theoretical and practical understanding of strategic decisions using tools drawn from economics, game theory, and psychology.
2. To enable students to interpret social and psychological situations within this framework.
3. To encourage students to take a broad view of policy decisions that have strategic implications, and to predict the consequences of those policies.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

The syllabus will include such topics as:

• Definition of strategic situation and equilibrium.
• Backward induction and rollback equilibrium.
• Strategic moves and the problem of credibility.
• Nash equilibrium in pure and mixed strategies.
• The prisoner's dilemma and the tragedy of the commons.
• Asymmetric information and unravelling.
• Screening and Signalling.
• Matching games and the deferred acceptance algorithm.
• Bargaining and negotiation.
• Evolutionary games.
• Auction theory and the winner's curse.
• Intrapersonal game.

Learning outcomes

By the end of the module, students should be able to:

• Understand and deploy the basic concepts of strategic thinking, in a largely non-mathematical way. These concepts include strategy, Nash equilibrium, prisoner's dilemma, backward induction, winner's curse, informational unravelling, and asymmetric information, costly signalling, and matching.
• Demonstrate logical and critical thinking skills in being able to recognize the potentially counter-intuitive effects of strategic decisions.
• Recognise the links between situations that differ widely in content but share common underlying strategic structures.
• Distinguish between the outcome of logical analysis and 'psychological' analysis of strategic situations.
• Discuss critically the strategic thinking underlying a broad range of decisions taken from all aspects of life.
• Analyse strategic situations and act so as to achieve optimal outcomes, including negotiations with others, and even with your own future selves.

Indicative reading list

Some useful resources:
Dixit, A. K., Reilly, D. & Skeath, S. (2015). Games of Strategy. Norton. (Fourth edition, but any edition is good).
Schelling, T. (1976). Micromotives and Macrobehaviour. Norton.
Binmore, K. (2007). Game theory: A very short introduction. Oxford University Press.
Roth, A. E. (2015). Who Gets What—and Why: The New Economics of Matchmaking and Market Design. Houghton Mifflin Harcourt.

Subject specific skills

Distinguish between the mathematical and economic concept of the correct strategy, and the 'psychological' concept, meaning what might be the correct strategy given what others are likely to do.
Understand how strategic thinking can influence success in all aspects of life.

Transferable skills

Perspective taking.
Logical analysis.
Presentation skills and argumentation.