.\".tm add Juergen on auctions etc BIE 1994
.tm add Molho Econ of Inf: Lying Cheating in M & O BB 1997
.\".tm Brandenburger
.so /usr/local/lib/jmac/ajm.header
.rm )k
.fp 1 NS
.fp 2 nS
.fp 3 Ns
.fp 4 ns
.ds HF 3 3 2 2 2 
.tr ~
.pl +1i
~
.S 13
.tl ''Australian Graduate School of Management''
.sp .2
.S 17
.tl ''\f(BI306 S\s-2TRATEGIC\s0 G\s-2AME\s0 T\s-2HEORY FOR\s0 M\s-2ANAGERS\s0\fR''
.S 13
.sp
.tl 'AGSM 306'Winter Term, 2000'R.E. Marks'
.sp .5
.tl 'Lectures: Mon/Thurs 10am  ''Ext. 271, Room 251'
.tl 'HDR ''\f(CObobm@agsm\f1'
.sp
.ce
.ul
.S 16
Reading/Reference List & Course Outline
.R
.S 13
.sp 1
.ti 3
Game theory provides a simple, but rich, framework for analysing once-off and
repeated interplay between people or firms, where the manner
in which each reacts depends upon the other's reaction:  strategic
interaction.
These interactions occur in markets, in organisations,
and in the household.
This subject\(emthrough lectures, experiential learning, and
computer simulations\(emwill attempt to provide students with
understanding of many interactions they may encounter as
managers, including price wars, wars of attrition, the value of
cooperation interactions, and the value of information.
It follows on from the Strategy section of Term 1 SET in MFP.
.sp .5
\f3Outline of subject:\f1
.sp -.5
.in +5
.TS
nl
 n l.
\f2Lecture	Topic\f1
.sp .5
1.	\f31. Strategic Decision Making\f1
2.	Firms Behaving Badly.
3.	Further Equilibria.
4.	More Examples.
5.	\f32. Decision Analysis:
	     Games Against Nature\f1
6.	Evaluation.
7.	Gaining Insight.
8.	Utility.
.\"9.	\f33. Strategic Moves\f1
.\"10.	\f34. Credible Commitments\f1
.\"11.	\f35. Repetition and Reputation\f1
9.	\f35. Unpredictability\f1
10.	\f36. Bargaining\f1
11.	\f37. Using Information Strategically\f1 Screening
12.	Signalling.
13.	\f38. Bidding and Auction Design\f1
14.	Concluded.
15.	\f39. Contracting,
	     or the Rules of the Game\f1
16.	Employing, Financing, Franchising.
17.	\f310. Choosing the Right Game: Coopetition\f1
18.	Concluded.
19.	\f3Student presentations\f1
20.	Concluded.
.TE
.in -5
.sp .5
.pl -1i
.ne 10
.\" .AL I
.\" .LI
.\" Decision Making
.\" .LI
.\" Games Against Nature \(em Decision Analysis
.\" .LI
.\" Strategic Interaction
.\" .BL
.\" .LI
.\" Information
.\" .LI
.\" Unpredictability
.\" .LI
.\" Reputation and Repeated Play
.\" .LE
.\" .LI
.\" Negotiating
.\" .LI
.\" Contracting
.\" .LI
.\" Bidding
.\" .LI
.\" And Beyond ...
.\" .LE
.sp
Recommended texts:
.sp .5
.in +2
.VL 3
.LI
.R
Bierman H.S. & Fernandez L.,
.ul
Game Theory with Economic Applications,
Addison-Wesley, 2nd ed., 1998.
330.015193/4 D (On reserve)
This is highly recommended, if not required.
It has good sections on games against nature (decision analysis), Nash
equilibrium, subgame perfection, and mixed strategies.
.\".LI
.\"Dixit A., & Nalebuff B.,
.\".ul
.\"Thinking Strategically: the Competitive Edge in Business, Politics, and Everyday Life,
.\"New York: Norton, 1991.
.\"AGSM 658.4012/115 (On reserve)
.\"I have no hestitation in saying that \f4all\f1 MBAs should have become
.\"familiar with this book.
.LI
Dixit A., & Skeath S.,
.ul
Games of Strategy,
New York: Norton: 1999.
AGSM 519.3/2 (On reserve)
A recent book, which builds on Dixit & Nalebuff, used in SET last term.
.LI
McMillan J.,
.ul
Games, Strategies, and Managers,
Oxford: OUP, 1992.
AGSM 658.4035/8 (On reserve)
A really good verbal discussion of the uses of game theory, but no game
trees!
I provide these in the Package lecture notes.
.LE
.sp
.ti -2
.ne 5
.R
As well, the following books will be found useful:
.VL 3
.\".LI
.\"Baird D.G., Gertner R.H., and Picker R.C.,
.\".ul
.\"Game Theory and the Law,
.\"Camb.: Harvard U.P., 1994.
.\"AGSM 340.1/4 (On reserve)
.LI
.R
Rasmusen E.,
.ul
Games and Information: An Introduction to Game Theory,
Oxford: B. Blackwell, 2nd edition, 1994. (On reserve)
.LI
.R
Ghemawat P.,
.ul
Games Businesses Play: Cases and Models,
MIT Press, 1997. (On reserve)
.\".LI
.\".R
.\"Kreps D.M.,
.\"Part III: Noncooperative game theory, in
.\".ul
.\"A Course in Microeconomic Theory,
.\"Princeton: PUP, 1990, Ch. 11,12,13,14,15.
.\"AGSM 338.5/85 (On reserve)
.LI
.R
Gardner R.,
.ul
Games for Business and Economics,
New York: Wiley, 1995. (On reserve)
.\".LI
.\"Maital S. & S.,
.\".ul
.\"Economic Games People Play,
.\"New York: yyy, 1984.
.\" .LI
.\" Milgrom P.R. & Roberts J.,
.\" .ul
.\" Economics, Organization and Management,
.\" Englewood Cliffs: Prentice-Hall, 1992.
.\" AGSM 338.502465/55
.LI
Dutta P.K.,
.ul
Strategies and Games: Theory and Practice,
Camb.: MIT Press, 1999.
AGSM 330.015193/6
.LE
.in -2
.sp
.R
Additional readings will be found below.  Recommended readings are marked with an asterisk (*).
A \f(hePackage\fP of course notes is available.  Readings in the \f(hePackage\fP are marked
with a \f(heP\fP.
I have also noted readings in the SET package as well.
.sp 1
.H 1 "Strategic Decision Making"
.VL 3
.LI
* Dixit & Skeath,
Ch3 Games with sequential moves,
Ch4 Games with simultaneous moves
.\".LI
.\"* Barnett, F.W.
.\"Making game theory work in practice,
.\".ul
.\"Wall Street Journal,
.\"1995 \f(heP\fP-SET
.\".LI
.\"* Bierman & Fernandez,
.\"Ch1 Nash equilibrium.
.\".LI
.\"* Kay J.,
.\"Economics and business,
.\".ul
.\"Economic Journal,
.\"\f3101\f1: 57\-63, 1991. \f(heP\fP-4
.\".LI
.\"* Quacks and coaches; and
.\"J. K\s-2AY,\s+2
.\"Art or science,
.\".ul
.\"The Economist,
.\"1993
.\"\f(heP\fP-7
.\".LI
.\"* O'Neill B.,
.\"International escalation and the dollar auction,
.\".ul
.\"Journal of Conflict Resolution,
.\"1986. \f(heP\fP-SET
.LI
* Schelling T.C., Ch7 Hockey helmets, daylight saving, and other binary
choices, in his \f2Micromotives and Macrobehavior,\f1
NY: Norton, 1978. \f(heP\f1-3
.LI
* Marks R.E., Competition and common property, 1998, \f(heP\fP-SET
.LI
* McMillan J.,
Ch3 Understanding cooperation and conflict.
.LI
* McAfee R.P. & J. McMillan,
Competition and game theory,
.ul
Journal of Marketing Research,
1996. \f(heP\f1-SET
.\".LI
.\"Baird Gertner & Picker,
.\"Ch1 Simultaneous decision-making and the normal form game.
.LI
Dutta,
Ch2 A first look at the thory,
Ch3 Strategic-form games and dominant strategies,
Ch4 Dominant solvability,
Ch5 Nash equilibria,
Ch6 Extensive-form games and backwards induction.
.LI
Gardner,
Ch1 Introduction,
Ch2 Two-person games,
Ch16 Voting games.
.LI
Rasmusen, Ch1 The rules of the game.
.\".LI
.\"Kreps, Ch11 Modeling competitive situations.
.\".LI
.\"Case J.H.,
.\"Ch1 Games and theories about them, in his
.\".ul
.\"Economics and the Competitive Process,
.\"NY: NYUP, 1979.
.\"AGSM 519.3/4
.LI
Schelling T.C.,
What is game theory? in his
.ul
Choice and Consequence: Perspectives of an Errant Economist,
Camb.: Harvard UP, 1980.
AGSM 300/35
.\".LI
.\"Postrel S.,
.\"Burning your britches behind you: can policy scholars bank on game theory?
.\".ul
.\"Strategic Management Journal,
.\"\f312\f1 (Special Issue): 153\-155, 1991.
.\".LI
.\"Nozick R.,
.\"Decision-Value, Ch. 2 in his
.\".ul
.\"The Nature of Rationality,
.\"Princeton: P.U.P., 1993.
.\".LI
.\"Baird Gertner & Picker,
.\"Game theory glossary, \f(heP\f1-2
.\".LI
.\"Luce R.D. & Raiffa H.,
.\"Ch1 General introduction to the theory of games, in
.\".ul
.\"Games and Decisions: Introduction and Critical Survey,
.\"NY: Wiley, 1957.
.\"AGSM 512.89/1
.\" .LI
.\" Schotter A.,
.\" Ch1 The nature and function of social institutions, in
.\" .ul
.\" The Economic Theory of Social Institutions,
.\" Camb.: C.U.P., 1981.
.\" AGSM 306.3/5
.\".LI
.\"Ordeshook P.C.,
.\".ul
.\"A Political Theory Primer,
.\"NY: Routledge, 1992.
.LE
.H 1 "Decision Analysis \(em Games Against Nature"
.VL 3
.LI
* Apocalpse maybe, and An insurer's worst nightmare,
.ul
The Economist,
1995/96
\f(heP\fP-5
.LI
* Hammond J.S., Keeney R.L., & Raiffa H.,
Hidden traps in decision making,
.ul
Harvard Business Review, Sept.\-Oct., 1998.
\f(heP\fP-6
.LI
* Matheson D. & J.,
The six dimensions of decision quality,
.ul
The Smart Organization,
Boston: Harvard Business School Press, 1998.
\f(heP\fP-7
.LI
* TreeAge Software,
Decision analysis primer,
.ul
DATA 3.5 User's Manual,
Williamstown: Mass.: TreeAge Software, 1999.
\f(heP\fP-10\c
http://www.treeage.com/demos/manual.html
.LI
* McNamee P. & Celona J.,
Influence diagram theory \f(heP\fP-8
Ch 3 Decisions under Uncertainty,
.ul
Decision Analysis with Supertree,
SF: Scientific Press, 1990. (On reserve)
.\".LI
.\"* Ulvila J.W. & R. Brown,
.\"Decision analysis comes of age,
.\".ul
.\"Harvard Business Review,
.\"1982, \f(heP\f1-14.
.\".LI
.\"* Course Notes \(em The Shoe Decision \f(heP\fP-35
.\".LI
.\"* Howard R.A.,
.\"A Party Problem, \f(heP\fP-34
.LI
* Howard R.A.,
Decision analysis: practice and promise,
.ul
Management Science,
1988.  \f(heP\fP-13
.LI
* Clemen R.T.,
Structuring decisions, and Sensitivity analysis,
.ul
Making Hard Decisions: An Introduction to Decision Analysis,
Belmont, CA: Duxbury, 1996
AGSM 658.403/242C \f(heP\fP-9,12
.\" .LI
.\" * Stokey E. & Zeckhauser R., Decision analysis, in \f2A Primer for Policy
.\" Analysis\f1, NY: Norton, 1978.
.\" AGSM 350/34,36,45 \f(heP\fP-7
.\" .LI
.\" * Bunn D. & Thomas H.,
.\" J. Sainsbury and the haul of contraband butter: a case in the effective
.\" formulation of a competitive bidding strategy, in
.\" .ul
.\" Modern Decision Analysis: Selected Readings,
.\" ed. by G.M. Kaufman & H. Thomas,
.\" Penguin, 1977.  \f(heP\fP-8
.\" .LI
.\" Raiffa H.,
.\" .ul
.\" Decision Analysis: Introductory Lectures on Choice under Uncertainty,
.\" Chapters 2 and 4, Menlo Park, Cal.: Addison-Wesley, 1968.
.\" AGSM 001.539/5
.\" .LI
.\" Behn R. D. & Vaupel J. W.,
.\" .ul
.\" Quick Analysis for Busy Decision Makers,
.\" NY: Basic Books, 1982.
.\" \s-2AGSM 658.40354/1\s0
.LI
* Samson D.,
Choosing between alternatives,
.ul
Managerial Decision Analysis,
Chicago: R.D.Irwin, 1988.
\f(heP\fP-11
.\".LI
.\"Manne A.S. & Richels R.G.,
.\"Buying greenhouse insurance,
.\".ul
.\"Energy Policy,
.\"\f319\f1(6): 543\-552, 1991.
.\" .LI
.\" Holloway C.,
.\" Ch 3 Modeling under uncertainty \(em diagrams and tables;
.\" Ch 4 Making choices under uncertainty, in
.\" .ul
.\" Decision Making Under Uncertainty: Models and Choices,
.\" Prentice-Hall, 1979.
.\" AGSM 658.4033/25
.\" .LI
.\" Lapin L.,
.\" Ch5 Basic concepts of decision making, in
.\" .ul
.\" Management Science for Business Decisions,
.\" NY: HBJ, 1980.
.\" AGSM 658.403/137
.\" .LI
.\" Brown R.V., Kahr A.S., & Peterson C.,
.\" .ul
.\" Decision Analysis for the Manager,
.\" NY: H&W, 1974.
.\" AGSM 658.403/12,92
.\" .LI
.\" Nelson T.R.,
.\" .ul
.\" The Management Science System,
.\" [software package]
.\" Chicago: R. Irwin, 1988.
.LI
* Skinner D.C.,
A thirty-minute guide to better decisions,
.ul
Introduction to Decision Analysis,
Gainesville: Probabilistic Press, 2nd ed., 1999.
\f(heP\fP-14
.LI
Dutta,
Ch26 Probability and expectations,
Ch27 Utility and expected utility.
.LI
Bierman & Fernandez, Ch 10.5\-10.7
.LE
.ne 8
.H 1 "Strategic Moves and Credible Commitment"
.VL 3
.\".LI
.\"* Photo wars,
.\".ul
.\"The Economist,
.\"1995 \f(heP\fP-12
.LI
* Bierman & Fernandez, Ch6 Subgame-perfect equilibrium
.LI
* Dixit & Skeath,
Ch9 Games with strategic moves.
.\" .LI
.\" * Oster S.M.,
.\" Ch12 Understanding rivalry: game theory, in her
.\" .ul
.\" Modern Competitive Analysis,
.\" NY: Oxford UP, 1994.
.\" AGSM \f(heP\fP-8
.\" .LI
.\" McDonald J.,
.\" Ch6 Cooperative games: chaos and stability, in
.\" .ul
.\" The Game of Business,
.\" NY: Doubleday, 1975.
.\" AGSM 658.4035/7 \f(heP\fP
.LI
* Brams  S.J. & J.M. Togman,
Cooperation through threats: the Northern Ireland case,
.ul
PS: Political Science & Politics,
March 1998. \f(heP\fP-4
.LI
Dutta, Ch13 Sub-game perfect equilibrium
.LI
Gardner,
Ch4 \f2n\f1-person games,
Ch5 Non-cooperative games,
.LI
Colman A.M.,
Ch8 Multi-person games: social dilemmas, in his
.ul
Game Theory and Experimental Games,
Oxford: Pergamon, 1982.
(Short loan T2/98)
.\" Game Theory and Its Applications in the Social and Biological Sciences
.\" Butterworth-Heinemann 1995  Ch.9
.\".LI
.\"Margolis H., Free riding versus cooperation, in
.\".ul
.\"Strategy and Choice,
.\"ed. by R.J. Zeckhauser,
.\"MIT Press, 1991.
.\"AGSM 658.403/236
.LI
Kay J.,
Ch3 Co-operation and Co-ordination, in his
.ul
Foundations of Corporate Success: How Business Strategies Add Value,
Oxford: OUP, 1993.
.\".LI
.\"Kreps, Ch12 Solution concepts for noncooperative games.
.\".LI
.\"Bachrach, M.
.\"Ch4 Two-person nonzero-sum non-cooperative games, in
.\".ul
.\"Economics and the Theory of Games,
.\"London: Macmillan, 1977.
.\"AGSM 330.0151/4
.LI
Brams S.J.,
Ch1 International relations games, in
.ul
Game Theory and Politics,
NY: Macmillan, 1975.
AGSM 320.0184/1
.\".LI
.\"Hardin R.,
.\"Group power, Ch. 2 in his:
.\".ul
.\"One for All,
.\"Princeton: P.U.P., 1995.
.\" .LI
.\" Brams S.J.,
.\" Ch9 Theory, evidence, and findings, in
.\" .ul
.\" Biblical Games: A Strategic Analysis of Stories in the Old Testament,
.\" Camb.: MITP, 1980.
.\" .LI
.\" Krass I.A., & Hammoudeh S.M.,
.\" Ch1 Games in extensive and normal forms, in
.\" .ul
.\" The Theory of Positional Games With Applications in Economics,
.\" NY: Academic Press, 1981.
.\" AGSM 330.015193/1
.\" .LI
.\" Selten R., A simple game of kidnapping,
.\" .ul
.\" Mathematical Economics and Game Theory: Essays in Honor of Oskar Morgenstern,
.\" ed. by R. Henn & O. Moeschlin,
.\" Berlin: Springer-Verlag, 1977.
.\" AGSM 330.0151/9 \f(heP\fP
.\".LE
.\".H 1 "Credible Commitment"
.\".VL 3
.\".LI
.\"* Dixit & Nalebuff, Ch6 Credible commitments.
.LI
Rasmusen, Ch4.1 Subgame perfectness
.LI
Gardner,
Ch6 Credibility and subgame perfection.
.LI
Ghemawat,
Ch 3: Preemptive capacity expansion in the titanium dioxide industry
.LE
.H 1 "Repetition and Reputation"
.VL 3
.\".LI
.\"* For love or money? and Trust in me,
.\".ul
.\"The Economist,
.\"1995 \f(heP\fP-15
.LI
* Dixit & Skeath,
Ch8 The Prisoner's Dilemma game.
.ne 5
.LI
* Nowak, M., R. May, & K. Sigmund,
The arithmetic of mutual help,
.ul
Scientific American,
1995 \f(heP\fP-20
.LI
* Hofstadter D.,
Ch29 The Prisoner's Dilemma computer tournaments and the evolution
of cooperation, in his
.ul
Metamagical Themas,
Penguin, 1985. \f(heP\fP-19
.LI
* Marks R.E., Midgley FD.F., & Cooper L.G.,
Adaptive behaviour in an oligopoly,
in 
.ul
Evolutionary Algorithms in Management Applications,
ed. by J. Biethahn & V. Nissen,
(Berlin: Springer-Verlag), 1995.
\f(heP\fP-21
.\".LI
.\"Baird Gertner & Picker, Ch2 Dynamic interaction and the extensive-form
.\"game, Ch5 Reputation and repeated games.
.LI
Dutta,
Ch14 Finitely repeated games,
Ch15 Infinitely repeated games.
.LI
Gardner,
Ch7 Repeated games,
Ch8 Evolutionary stability and bounded rationality.
.LI
Rasmusen, Ch4 Dynamic games and symmetric information,
Ch5 Reputation and repeated games with symmetric information.
.\".LI
.\"Kreps, Ch14 Repeated play: cooperation and reputation.
.\".LI
.\"Fader P.\^S., & Hauser J.\^R.
.\"Implicit coalitions in a generalized Prisoner's Dilemma.
.\".ul
.\"Journal of Conflict Resolution
.\"\f332\f1:  553\-582, 1988.
.\".LI
.\"Miller G.,
.\".ul
.\"Managerial Dilemmas: The Political Economy of Hierarchy,
.\"Cambridge: CUP, 1992, Part III.
.\"AGSM 658.402/3
.\".LI
.\"Glance N.S. & Huberman B.A.,
.\"The dynamics of social dilemmas,
.\".ul
.\"Scientific American,
.\"1994.
.LE
.H 1 "Unpredictability"
.VL 3
.LI
* Bierman & Fernandez, Ch10.4
.LI
* Dixit & Skeath, Ch5 Simultaneous-move games with mixed strategies
.\"Ch8 Brinkmanship.
.LI
Dutta, Ch8 Mixed strategies
.LI
Gardner,
Ch3 Mixed strategies.
.LI
Rasmusen, Ch3 Mixed and continuous strategies.
.LE
.H 1 "Bargaining"
.VL 3
.LI
* Bierman & Fernandez, Ch7 Bargaining.
.LI
* Dixit & Skeath, Ch16 Bargaining
.LI
* McMillan, Ch5 Gaining bargaining power; Ch6 Using information strategically.
.LI
* Elster J.,
Ch14 Bargaining, in
.ul
Nuts and Bolts for the Social Sciences,
Camb.: CUP, 1989 \f(heP\fP-22
.LI
* Murnighan J.K.,
Game's End, Chapter 15 in his:
.ul
Bargaining Games: A New Approach to Strategic Thinking in Negotiations,
NY: William Morrow, 1992. \f(heP\fP-23
.LI
Schelling T.C.,
Ch2 Essay on bargaining, in
.ul
The Strategy of Conflict,
Camb.: Harvard UP, 1980.
.\".LI
.\"Baird Gertner & Picker, Ch7 Noncooperative bargaining
.LI
Gardner,
Ch12 Two-person bargains, Ch14 \f2n\f1-person bargaining and the core.
.\".LI
.\"Kreps, Ch15 Bilateral bargaining.
.LI
Rasmusen, Ch11 Bargaining.
.\" .LI
.\" Hausner M., Nash J., Shapley L., & Shubik M.,
.\" Ch24 \(lqSo long, sucker\(rq \(em a four-person game, in
.\" .ul
.\" Game Theory and Related Approaches to Social Behavior,
.\" ed. by M. Shubik,
.\" NY: Wiley, 1964. \f(heP\fP
.\".LI
.\"Young O.,
.\"Introduction, to Manipulative Models of Bargaining, Part Four of
.\".ul
.\"Bargaining: Formal Theories of Negotiation,
.\"ed. by O. Young,
.\"Urbana: U Illinois P, 1975.
.\"UNSW S301.64/5,5A
.\"(On reserve)
.\".LI
.\"Ross H.L.,
.\"Ch4 Negotiation, in
.\".ul
.\"Settled Out of Court: The Social Process of Insurance Claims Adjustments,
.\"Chicago: Aldine, 1970.
.\"UNSW L/KN33.1/R1/1
.\"(On reserve)
.\".LI
.\"Raiffa H.,
.\"Ch ??
.\".ul
.\"The Art and Science of Negotiation,
.\"Camb.: Harvard U.P., 1982.
.\"AGSM 302.3/7,16
.LI
Brams S.J.,
.ul
Negotiation Games: Applying Game Theory to Bargaining and Arbitration,
NY: Routledge, 1990.
AGSM 302.3/30
.\".LI
.\".ul
.\"Negotiation Analysis,
.\"ed. by H. Peyton Young,
.\"Ann Arbor : University of Michigan Press, c1991.
.\".LI
.\"Bazerman M.H. & M.A. Neale,
.\".ul
.\"Negotiating Rationally,
.\"NY: Free Press, 1992.
.LE
.H 1 "Using Information Strategically"
.VL 3
.\".LI
.\"* Beardsley, T.,
.\"Honest advertising,
.\".ul
.\"Scientific American,
.\"1993.  \f(heP\fP-27
.LI
* McMillan, Ch6 Using information strategically
.LI
* Dixit & Skeath,
Ch12 Uncertainty and information
.LI
* Rasmusen, Ch2 Information
.LI
Bierman & Fernandez, Ch13 Bayesian Nash equilibrium,
Ch15 Perfect Bayesian equilibrium, Ch18 Adverse selection and credit rationing
.LI
Dutta, Ch24 Signaling games and the lemon problem
.\".LI
.\"Baird Gertner & Picker, Ch4 Signalling, screening, and nonverifiable
.\"information
.LI
Gardner,
Ch9 Signaling games.
.\".LI
.\"Kreps, Ch13 Incomplete information and irrationality
.LE
.H 1 "Bidding and Auction Design"
.VL 3
.LI
* Bierman & Fernandez,
Ch14 Auctions
.LI
* Revenge of the nerds,
It's only a game, and
Learning to play the game,
.ul
The Economist,
1994, 1996, 1997
\f(heP\fP-SET
.LI
* Sabbagh D.,
The numbers game,
.ul
The Daily Telegraph,
1 April, 2000.
\f(heP\fP-27
.LI
* Landsburg S.E.,
Cursed winners and glum losers,
Ch. 18 of his:
.ul
The Armchair Economist: Economics and Everyday Life,
N.Y.: The Free Press, 1993.
\f(heP\fP-SET
.LI
* Norton, R.,
Winning the game of business,
.ul
Fortune,
1995, \f(heP\fP-SET
.LI
* Koselka, R.,
Playing poker with Craig McCaw,
.ul
Forbes,
1995, \f(heP\fP-SET
.LI
* Dixit & Skeath, Ch15 Bidding and auction design
.LI
* McMillan, Ch11 Bidding in competition
.LI
* McAfee R.P. & J. McMillan,
Analyzing the airwaves auction,
.ul
Journal of Economic Perspectives,
1996 \f(heP\fP-25
.LI
* R. Marks,
Closed tender vs. open bidding auctions,
22 December, 1994.
\f(heP\fP-26
.LI
.ul
* The Economist,
Secrets and the prize,
12 October 1996, p.98.
\f(heP\fP-15
.LI
.ul
* Scientific American,
Making honesty pay,
January 1997, p.13.
\f(heP\fP-16
.LI
Dutta,
Ch23 Auctions
.LI
Gardner,
Ch11 Auctions.
.LI
Brams S.J. & A.D. Taylor,
Fair division by auctions, Ch. 9 in their
.ul
Fair Division: From Cake-Cutting to Dispute Resolution,
Cambridge: CUP, 1996.
AGSM 303.69/4
.LI
Rasmusen, Ch12 Auctions.
.\".LI
.\"Reece D.K.,
.\"An analysis of alternative bidding systems for leasing offshore oil,
.\".ul
.\"Bell J. of Economics,
.\"\f210\f1(2): 659\-669, 1979.
.\".LI
.\"Smith C.W.,
.\".ul
.\"Auctions: social construction of value,
.\"Berkeley: UC Press, 1990.
.LE
.H 1 "Contracting"
.VL 3
.\".LI
.\"* Dixit & Nalebuff, Ch12 Incentives.
.LI
* McMillan, Ch8 Creating incentives; Ch9 Designing contracts;
Ch10 Setting executives' salaries.
.LI
* Williamson O.E.,
Strategizing, economizing, and economic organization,
.ul
Strategic Management Journal,
1991.  \f(heP\fP-26
.LI
* Kay, Ch4 Relationships and contracts.
.LI
* Bierman & Fernandez, Ch12 Moral hazard and involuntary unemployment.
.LI
Dutta,
Ch19 Moral hazard and incentive theory
.LI
Gardner,
Ch10 Games between a principal and an agent.
.LI
Milgrom P. & Roberts J., Ch5 Bounded rationality and private information;
Ch6 Moral hazard and performance incentives.
.ul
Economics, Organization and Management,
Englewood Cliffs: Prentice-Hall, 1992.
AGSM 338.502465/55
.\".LI
.\"Borland J. & Reed T.,
.\"Withdrawal from joint venture agreements.
.\"(On reserve)
.\".LI
.\"Kreps,
.\"Ch16 Moral hazard and incentives;
.\"Ch17 Adverse selection and market signaling;
.\"Ch18 The revelation principle and mechanism design.
.LE
.H 1 "Choosing\ the\ Right\ Game:\ \f4Co-opetition\f1"
.VL 3
.LI
* Brandenburger A.M. & B.J. Nalebuff,
The right game: using Game Theory to shape strategy,
.ul
Harvard Business Review,
1995 \f(heP\fP-29
.br
Look at this Web page:
.br
\f(COhttp://mayet.som.yale.edu/coopetition/index2.html\f1
.LI
* R. Koselka,
Businessman's dilemma, and Evolutionary economics: nice guys don't finish
last,
.ul
Forbes,
October 11, 1993. \f(heP\f1-SET
.LI
* Brandenburger A.M. & B.J. Nalebuff,
.ul
Co-opetition: 1. A revolutionary mindset that combines competition and cooperation; 2. The Game Theory Strategy that's changing the game of business.
NY: Currency Doubleday, 1996.
(On reserve)
.LI
Brandenburger A.M. & Harborne W.S.Jr.,
Value-based business strategy,
.ul
J of Econ & Management Strategy,
\f35\f1(1), 1996.
.LE
.H 1 "And Beyond ..."
.VL 3
.\".LI
.\"Baird Gertner & Picker, Ch. 6 Collective action, embedded games, and the
.\"limits of simple models
.\".LI
.\"Morrow J.D.,
.\".ul
.\"Game Theory for Political Scientists,
.\"Princeton: P.U.P., 1994.
.\"AGSM320.015193/2.
.\".\".LI
.\".\"Rational economic man,
.\".\".ul
.\".\"The Economist,
.\".\"1994, \f(heP\fP-31
.\".LI
.\"Casson M.,
.\".ul
.\"The Economics of Business Culture: Game Theory, Transaction Costs and Economic Performance,
.\"Oxford: OUP, 1991.
.\".\".LI
.\".\"McMillan, Ch13 Organizing a network of sub-contractors.
.\".\".LI
.\".\"Rasmusen, Ch7&8 Moral hazard; Ch9 Adverse selection; Ch10 Signalling;
.\".\"Ch13 Pricing; Ch14 Entry; Ch15 Industrial organization.
.\".\".LI
.\".\"Kreps, Ch19 Theories of the firm.
.\".\" .LI
.\".\" Dekel E., & S. Scotchmer,
.\".\" Collusion through insurance: sharing the cost of oil spill cleanups,
.\".\" .ul
.\".\" American Economic Review,
.\".\" \f380\f1(1): 249\-252, 1990.
.\".\".LI
.\".\"Colman A.,
.\".\" Ch 12 Game theory and philosophy
.\".\"Ch13 Moral philosophy and practical problems of strategy.
.\".\" .LI
.\".\" Wallich P. & Corcoran E., Games that networks play,
.\".\" .ul
.\".\" Scientific American,
.\".\" July 1991. \f(heP\fP
.\".\" .LI
.\".\" Arthur W.B.,
.\".\" Positive feedbacks in the economy,
.\".\" .ul
.\".\" Scientific American,
.\".\" Feb., 1990. \f(heP\fP-23
.\".LI
.\"Schelling T.C.,
.\"Altruism, meanness, and other potentially strategic behaviors,
.\".ul
.\"American Economic Review,
.\"\f368\f1(2): 229\-231, May 1978.
.\".LI
.\"Crawford V.P.,
.\"Thomas Schelling and the analysis of strategic behavior, in
.\".ul
.\"Strategy and Choice,
.\"ed. by R.J. Zeckhauser,
.\"MIT Press, 1991.
.\"AGSM 658.403/236
.\".\"Zeckhauser, op.cit.
.\".\".LI
.\".\"Frank R.H., Beyond self-interest,
.\".\".ul
.\".\"Challenge,
.\".\"March/April, 1989. \f(heP\fP-24
.LI
.R
For a history of game theory since Old Testament times, point your browser at
the following URL:
.br
\f(COhttp://www.canterbury.ac.nz/econ/hist.htm\fP
.LI
For further surfing on the 'Net about game theory, start at the following
URL:
\f(COhttp://www.harvard.edu/\(apalroth/alroth.html\f1
.LE
.\" .sp
.\" .VL 3
.\" .LI
.\" Schelling T.C.,
.\" .ul
.\" Micromotives and Macrobehavior,
.\" NY: Norton, 1978.
.\" AGSM 301.113/4,5,6
.\" .LI
.\" Jarrow R.A.,
.\" Strategic Decision Making (Noncooperative Dynamic Games),
.\" MS, April 1990.
.\" .LI
.\" Fudenberg D. & Tirole J.,
.\" A Course in Game Theory,
.\" MS, nd.
.\" .LI
.\" Zeckhauser R.,
.\" Distinguished Fellow: reflections on Thomas Schelling,
.\" .ul
.\" Journal of Economic Perspectives,
.\" Spring 1989, pp. 153\-164.
.\" .LI
.\" Tirole J.,
.\" (Game theory) In honor of David Kreps, winner of the John Bates Clark Medal,
.\" .ul
.\" Journal of Economic Perspectives,
.\" Summer 1990, pp. 155\-165.
.SK
.ce
.ul
.S 16
Assessment
.R
.S 13
.sp 1
There will be three assignments and a
short term project.
.AL
.LI
The first assignment will be handed out on Thursday, May 25, and is due
two weeks later, on Thursday June 8, by 4 pm.
This assignment is worth 15% of the final grade.
.\"and must be done
.\"individually, although students may talk (but \f2not copy others' work\f1).
.LI
The second assignment will be handed out on Monday, June 12, and is due
on Thursday, June 22, by 4 pm.
This assignment is worth 15% of the final grade.
.LI
The third assignment will be handed out on Monday, June 26, and is due
on Thursday, July 6, by 4 pm.
This assignment is worth 15% of the final grade.
.LI
Your project is due by 4 pm on Friday, August 14, and is worth 55% of the
final grade.
It may be done in groups of one, two, or three students.
Please hand in a one- or two-page outline of the project topic by June 26.
Groups will present brief outlines of their work on the last day of class.
(See the excellent examples by Edwin Low and by Sue Strudwick in the Package
(\f(heP\fP-SET and \f(heP\fP-2)).
.LI
You should start thinking about a project as soon as possible.
Please come and talk to me about (a) possible topics of application, and (b)
if you want to form a team to do it.
I shall hand out a list of possible (but not exclusive) topics in class, but
you might like to look at some projects from previous years.
.LE
.S 10

.ce 2
Previous projects available from Bob for perusal:
.br
(M = movie, S = sport, W = war, B = business, N = novel, P = politics)
.TS
center;
ll.
Basnayake \a	\f2The Hunt for Red October\f1, the movie
	M: Game theory applications in naval warfare.
.sp .2
Beale \a	The America's Cup, 1983
	S: An analysis of the strategic interactions of the winning campaign of
	\f2Australia II\f1.
.sp .2
Beaver \a	The Gulf War
	W: Trying to unravel the misunderstandings and motives and strategies of
	the two sides which resulted in war and death.
.sp .2
Blumberg \a	The ARL versus Super League Rugby
	S: Was the tussle a PD? Could mch anquish and money have been saved?
	Analysing the battle for control of rugby league.
.sp .2
Bugg \a	The natural-gas-pipeline game
	B: BHP v. AGL for NSW\-Victoria interconnection
.sp .2
Carlin \a	Home loan wars
	B: Two types of player in the highly rivalrous oligopoly of mortgage
	lending in 1996 NSW.
.sp .2
Chan \a	Bargaining in the H.K. prperty market
	B: Behaviour, from a seller's perspective, on the roiling Hong
	Kong property market.
.sp .2
Davis \a	The shifting sands: OPEC
	B: A game-theory analysis of the development, formation, and demise of
	OPEC.
.sp .2
Fahy \a	Midway
	W: Yamamoto's attack on the island failed: it relied on faulty
	logic, a non-credible threat, and was known of in advance.
.sp .2
Flynn \a	\f2Wall Street\f1, the movie
	M: Applying the rules and core concepts of game theory to the
	world of Wall Street and the actions of Bud Fox, of the movie.
.sp .2
Fogarty \a	Sexual politics in \f2Disclosure\f1, the novel & movie
	M: Sexual harassment \(em a strategic weapon in the game of office politics?
.sp .2
Foong \a	The Whitlam dismissal
	P: The framework of game theory enlightens Gough's and
	Malcolm's deliberations in 1975.
.sp .2
Frith \a	\f2Rats in the Ranks\f1, the documentary
	P: Analyses the interactions of the candidates for Mayor of Leichhardt.
	The movie records the words, actions, and musings as they happened.
.sp .2
Karanjia \a	The war of the browsers
	B: Microsoft v. the US Justice Dept., with focus on the battle
	between Netscape and Explorer.  Uses a \f2Coopetition\f1 persepctive.
.sp .2
Koo \a	The battle for AFL first and last rights
	B/S: Sport is big business. The bidding battle for AFL TV rights
	among Network Seven, The Nine Network, the AFL, and the rest of us.
.sp .2
Kwok \a	Signalling in the job market
	B: Education and the MBA as a signal. (5-week)
.sp .2
Lam \a	Joint ventures in the oil & gas exploratory industry
	B: Information asymmetries may allow \(lqhidden actions\(rq;
	incentives to reduce these. (5-week)
.sp .2
Lim \a	\f2Ransom\f1 \(em strategic interactions in kidnapping
	M: Should extortionists be paid? Watch Mel Gibson turn the tables.
	Analyses three interactions in the movie.
.sp .2
Loncar \a	Croatia's strategies in the fall of Yugoslavia
	W: David v. Goliath: Croatia's political and military
	strategies during the fall of Yugoslavia.
.sp .2
Low \a	R.J.R. Nabisco: the world's richest auction \f(heP\f1-5
	B: \f2Barbarians at the Gate\f1 helps answer two questions:
	\(bu can game theory explain the protagonists' action in the L.B.O.?
	\(bu would a game theorist have acted differently?
.sp .2
McKay \a	The Pacific War 1941\-45: its beginning and end
	W: Was the war inevitable? Why did the negotiations to end it fail?
	Analysis of the Japanese and US diplomatic and military strategies.
.sp .2
Mutesigensi	The fate of student strikes
	P: An analysis of a Ugandan student strike in which two students were
	killed: a \(lqlose\-lose\(rq outcome, which might have been avoided.
.sp .2
Pandey \a	Winning the Sydney 2000 Olympics
	B: \(lqThe Bid\(rq \(em Australia's strategy in winning the Olympics.
.\"Pitt \a	Game theoretic analysis of punishment systems (5-week)
.\" \a	How do punishment systems sustain society's accepted norms?
.\" \a	By sufficent penalties and by varied penalties.
.\"Rotenstein \a	Acquisition of Bridge Oil
.\"	Parker & Parsley v. Gantry in a 1994 takeover battle.
.sp .2
Salvador \a	The Marco ouster ??
	P: In 75 hours a small group of soldiers toppled the President.
	Credible commitments and asymmetric information in the coup.
.sp .2
Sayers \a	\f2The Bonfire of the Vanities\f1
	N: Master of the Universe or Master of the Game. McCoy falls.
	Analysis of three interactions in the novel.
.sp .2
Shergold \a	Australian pay-TV
	B: Game theory applied to three key interactions:
	1. Optus and Telecom's cable rollouts
	2. Murdoch v. Packer over Rugby League
	3. Foxtel v. Optus Vision for the Seven Network.
.\"Smith \a	Three areas (5-week)
.\" \a	Evolutionary stable strategies, coordination games,
.\" \a	forwards and backwards induction.
.sp .2
Smith \a	Conrad's \f2Nostromo\f1, the novel
	N: By modelling three games embedded in the novel's storyline,
	shows how game theory can help in the analysis of the plot.
.sp .2
Strudwick \a	Celluloid games: Cannes Film Festival \f(heP\f1-SET
	B: Selling cinematic rights for independently produced motion
	pictures on the Riviera analysed.
.sp .2
Thilges \a	China-Taiwan-USA international foreign policy ??
	P: China v. Taiwan in 1995: or Shells over the straits.
.sp .2
Viney \a	Mahathir\-Keating: recalcitrant duo?
	P: Malaysia v. Australia: A three-week spat analysed.
.sp .2
Whitten \a	Entering the ERP software industry
	B: Should Innovit enter the industry? Is it a zero-sum game?
	An analysis suggests that Innovit's perspective was limited.
.sp .2
Yan \a	Hong Kong Chinese newspaper price war
	B: The entrance of the \(lqApple Daily\(rq and the following price wars.
.TE