An Introduction to Game Theory

“Game Theory”, or the science of strategy, is a big topic that leads in many fascinating directions. This post will provide a basic understanding of what Game Theory is, and how it can be utilised in management situations. In addition to providing my own course material, I have also attempted to tie into some of the amazing resources that already exist.

My advice for you is to watch this video, and then choose one (or more) of the additional readings.

 

Lecture handout: Game Theory*

Activity: Game Theory Worksheet and Obedient Prisoners
  • Other good activities to accompany the Game Theory lecture include: Oligopoly Game 42 and “Cheating for a £20”.
  • I like to follow the lecture on Game Theory with an interactive session on Oligopoly.

Here is a video on finding a Nash equilibrium:

Additional readings

Here are some recommendations, depending on your level of interest and time constraints:

But the Game Theorist’s “bible” is Thinking Strategically” by Dixit, A., and Nalebuff, B (Norton, 1993). This is the one book you need to read, re-read, and master.

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Finally, it is great fun to apply Game Theory to popular culture. See Michael Statsny’s discussion of game theory in movies, and a collection of popular cultural references. Here are some of my favourite discussion questions:

I also like these two classic clips from Goldenballs:


Learning Objectives:

One Reply to “An Introduction to Game Theory”

  1. It’s been years since I gave this subject serious attention and I’m certain I never read Think Strategically. It’s an addictive subject that can burn you out if you’re not careful.

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