Game theory provides a theoretical framework for analysing optimal behavior in economic and non-economic decision-making situations involving multiple participants. This course examines fundamental game-theoretic concepts, models of conflict and cooperation, equilibrium concepts in different types of strategic interactions, and basic computational algorithms. It illustrates the presented concepts using well-known representative games and draws on published in-class experiments to provide students with hands-on experience. Upon successful completion of this course, students will be able to describe, represent, and solve basic strategic situations involving multiple participants. They will also be able to identify optimal solutions in decision-making under risk and uncertainty.

The course is completed by course credit with a letter grade.

The final letter grade for the course will be awarded based on the following scores that students can earn during the semester (maximum points in parentheses):

• Participation in online games (20 points);

• Performance in two credit tests – a midterm credit test (40 points) and a final credit test (40 points).

• Attendance and active participation in seminars (up to 10 bonus points; attendance is mandatory, with a maximum of three absences that must be properly excused in advance).

The final letter grade will be determined according to the following scale: A: 90–100 points, B: 80–89 points, C: 70–79 points, D: 60–69 points, E: 50–59 points, F: fewer than 50 points.

The exact dates of both credit tests will be announced by the instructor at the beginning of the semester.

Students who fail to fulfil any of the course requirements may, at the instructor's discretion, be allowed to take a cumulative make-up credit test covering the entire semester. In such cases, the final letter grade will be determined solely on the basis of the result of this test.

All credit tests are conducted in accordance with the common examination rules of the School of Business.

R: OSBORNE, M.J. (2011), Introduction to Game Theory (9th edition). Oxford University Press. ISBN: 019512895-8.

R: Başar, T., Zaccour, G. (2018),  Handbook of Dynamic Game Theory, Springer International Publishing AG, 978-3-319-44373-7.

R: GIBBONS, R. (1992) - A Primer in Game Theory, Pearson Academic. ISBN: 9780745011592.

A: Selected academic articles

1. Introduction, definition of basic terms. Role of game theory in economic and social sciences.

2. Strategic interactions. What is game. Types of games and illustrative examples.

3. Static games of complete (and perfect) information. Normal form games. Elimination of strategies (strict vs. weak dominance).

4. Nash equilibrium for static games of complete information. NE in selected games.

5. Pure vs. mixed strategy equilibrium. Lotteries and von Neumann and Morgenstern preferences.

6. Dynamic games of complete and perfect information. Games in extensive form. Backward induction.

7. Subgames. Subgame perfect Nash equilibrium. Applications, practical exercises.

8. Repeated games and their equilibrium.

9. Games of incomplete information. Static (Bayesian) games and Bayesian Nash equilibrium.

10. Applications of Battle of sexes and modified prisoners’ dilemma.

11. Dynamic (signaling) games of complete but imperfect information. Subgames vs. Information sets.

12. Beliefs and weak perfect Bayesian equilibrium and its applications, practical exercises.

13. Auctions (games of incomplete information; static or dynamic). Types, strategies, equilibria, and applications.

14. Final Recap.