Game Theory: The Art and Science of Rational Decision-Making and Strategic Thinking
How to make correct decisions and choices is of fundamental importance to most subjects and disciplines including Management, Business, Marketing and Strategy. Furthermore, in all walks of life, people - whether in their roles as consumers, employees, managers, entrepreneurs and so on - make decisions all the time on a wide variety of matters. The same is true of organisations, be they firms and businesses, or countries and international institutions. Indeed, much of life - professional and personal - involves the requirement to make decisions and choices.
Often we make these choices instinctively and without analysing what the correct decision might be, the decision that will have the greatest payoff and hopefully result in the outcome that we are seeking. The field of “Game Theory” is a set of tools, concepts, methods and models that help people to make decisions rationally and to achieve as best a result as possible. These tools help students to taking into account, for example, how the result of their choices will also depend on the decisions of other people (the other “players” in the game). Indeed a more descriptive terminology of “Game Theory” is that it is the “art and science of rational decision-making”. Game Theory is a discipline that was founded by the polymath and genius John von Neumann in the 1940s and it has been developed over the intervening period by many top scholars from across the world, including several Nobel Prize Winners such as John Nash and Thomas Schelling.
Game theory is the core method for studying decision-making in almost all social science subjects such as Economics, Management and Business but it is also used in the sciences and the humanities. Its techniques are used directly or indirectly in many private and public sector organisations to inform and improve their decision-making as well as in competitive markets and other strategic environments. The concept of Nash equilibrium lies at the heart of game theory and in this course – which is taught at postgraduate level, students will not only gain an understanding of this central concept but they will also learn how to apply to it to a variety of business scenarios and other strategic environments.
In addition, the importance of “credibility” as captured in the game theory concept of “subgame perfection” will be analysed and shown to be a key aspect of understanding dynamic competition and interaction.”