STRATEGIC ANALYSIS FOR ECONOMIC DECISIONS
The goal is to introduce the method of analysis of game theory, providing, at an introductory but rigorous level, the necessary tools to analyze the strategic interaction between individuals and rational institutions. These tools are a necessary condition for the student who wants to analyze economic relationships and, therefore, abandon the basic(and unrealistic) instructional paradigm of a single representative agent which maximizes against “Nature”.
FINALLY, THE SCHEMES AND SOLUTIONS OF THE COURSE AIM TO MAKE THE STUDENT REASON ABOUT THE CONFLICTUAL RELATIONS BETWEEN AGENTS OR COMPANIES IN DIFFERENT CONTEXTS.
Elementary knowledge of probability theory; elementary knowledge of markets
1) Preliminary Concepts: Concept of probability and expected utility theory; Rules of the game; Representation of games; Pure and mixed strategies; Role of information: complete-incomplete-imperfect. Solutions for constant-sum games.
2) Basic concepts of the theory in the solution of non-cooperative games: iterated elimination of strictly dominated strategies; Nash equilibrium; "Refinements" of the concept of equilibrium: Subgame Perfect Nash Equilibrium. THPE (Trembling Hand Perfect Equilibrium).
3) Repeated games and endogenous cooperation: Folk Theorem (Grim strategies and Tit-for-Tat)
4) games with incomplete information. Bayes' theorem; The Bayesian equilibrium, Bayesian Theory of Games and Perfect Bayesian equilibrium.
5) Applications: markets (duopoly).
Lectures and exercises with active participation of students.
Reference texts are used to learn techniques and tools, while "Lessons" and "Other Teaching Materials" serve to introduce theoretical tools and application contexts of the course.
1) Chiarini Bruno, Un Mondo in Conflitto, Teoria dei Giochi Applicata, Mondadori 2017 SECOND EDITION.
2) optional: Colombo Ferdinando, Introduzione alla Teoria dei Giochi, Carocci 2007.
3) The lessons are available in PDF on the teacher’s website, on that of the Faculty and on the e-learning portal, where they can be downloaded.
4) Other teaching materials: Papers and various educational materials, suggested by the teacher during the course
The specific contents of the course are evaluated through a written test with an appropriate number of questions and exercises. The evaluation is addressed to explore the students’ knowledge and understanding, but also their autonomous conduct of the problem, as well as their ability to implement solutions and equilibria to the various economic context.
Expected learning outcomes
Knowledge and understanding: the student must demonstrate his ability to understand the problems relating to the use of strategic analysis tools for the interpretation of the various economic and social contexts.
Ability to apply knowledge and understanding: the student must demonstrate that he has acquired the knowledge of the theoretical foundations of the proposed logical approach and be able to combine it with operational skills, both in the interpretation of specific economic policy interventions by the institutions and in the understanding of strategies behavioral at company, microeconomic and macroeconomic level.
Autonomy of judgment: the student must demonstrate that he is able to provide an independent assessment of the problems studied and indicate the main (optimal) strategies of corporate, economic and institutional policy derived in the various contexts; he must also demonstrate that he has developed a critical spirit through participation in open and transversal debates in the classroom with respect to the issues established.
Communication skills: the student must have the ability to correctly use the terminology necessary to dissert on the topics of the written test questions scheduled for the final exam, as well as to present the discussions that will take place during the lessons. The language used will alternate the technical approach with the more merely popular one also through simplifications deriving from the demonstration of practical cases.
Learning skills: the student must have acquired a learning ability to make it able to achieve updates by consulting scientific texts and publications relating to issues related to the application of strategic analysis to the functioning of the economic system.