Economic Decisions and Games

Economic Decisions and Games --- Business interactions often involve making a lot of decisions; decisions that must respond to and anticipate the response of others. Economists use the tools of game theory to help us describe and analyze these situations. As a decision maker in a business, these tools can help us understand how those we work with and interact with will respond to incentives and how to design and play strategic "games" to achieve our goals. We also know that people do not always act in the way that a basic economics textbook would describe, and so we must be aware of and ready for this also. In this course we will describe, play, and analyze different economic simulations/games that will illustrate the key aspects of various situations that may be encountered in the business world. After playing each game we will discuss applicability to real-world business situations, the predictions of the "standard" economic model, and the results of our own experiment playing the game. This will help us learn how to become better decision makers and game-theoretic thinkers and how we might design incentives and situations to achieve our own goals. The topics we will cover include: individual decision making; trust, collusion, and division of the economic "pie"; information use and asymmetry; and some public policy topics such as taxation of externalities and freeriding. These topics should be of interest to anyone working in or running a business, not just those interested in a theoretical view of decision making.