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Unit of study_

ECON6025: Strategic Decision Making

Decision makers face two types of uncertainty: uncertainty about the state of nature (how much oil is in an oilfield) and uncertainty about the strategic behaviour of other decision makers (how many oil wells they will drill). This unit of study focuses on strategic uncertainty and the uses decision makers can make of the concepts of game theory to guide their decisions. Game theory studies situations where a) agents have conflicts of interests and b) agents can take actions that directly affect their payoffs and the payoffs of others. A very broad range of applications from business and economics fit the above description and therefore can be studied by the methods of game theory. Applications include, firm pricing and output decisions, market entry and exit, hold-up, collusion, bargaining, auctions, and signalling.

Code ECON6025
Academic unit Economics
Credit points 6
Prerequisites:
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ECON6001 or ECOF6080 or ECON6701
Corequisites:
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None
Prohibitions:
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None

At the completion of this unit, you should be able to:

  • LO1. demonstrate familiarity with the main approaches and concepts of Game Theory
  • LO2. identify the likely outcome arising from the interaction of strategic players
  • LO3. recognize “real world” economic situations that can be studied by game theory, be able to model them as games, and predict the likely outcomes
  • LO4. understand the limitations of various models, distinguish between competing explanations, and critically evaluate competing theories
  • LO5. participate in public policy discussions arising in business and government environments.

Unit outlines

Unit outlines will be available 1 week before the first day of teaching for the relevant session.