This course is designed to use the tools of decision theory and game theory to understand economic, political and social problems and issues. Among other topics, it will examine the fallacy of sunk costs; techniques to determine the credibility of threats and promises; the importance of identifying dominated strategies; the potential value of randomizing strategies; the importance of knowing how much rivals know before choosing a strategy. We will also examine some case studies such as using auction theory and matching theory in the design of markets. While mathematical skills such as calculus and algebra will increase the student’s enjoyment of the course, these are not required. What is required is a curious mind and a willingness to think formally and analytically about interesting and (sometimes) important problems.
• Assignments include problem sets, a mid-term and final exam, and an applied project with a class presentation component.
A course text has not yet been selected; however, books such as Schelling’s The Strategy of Conflict, Brandenberger and Nalebuff’s Co-opetition or Dixit and Nalebuff’s The Art of Strategy are examples of the types of problems and approaches used in the course.