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Application of game theory in marketing

  • Class 30
  • Practice 30
  • Independent work 60
Total 120

Course title

Application of game theory in marketing

Lecture type

Obligatory

Course code

21-04-505

Semester

2

ECTS

4

Lecturers and associates

Course overview

This module introduces students to the game theory and complements the learn in marketing and business modules.
The objectives of this module are to enable students to:
• classify games and compare segments of game theory,
• apply strategic moves and find a solution of a game,
• select the appropriate application of game theory methods in marketing and business.
The module is a mixture of theory and applications; it provides an analytical framework through game theory to study aspects of co-operation, coordination, differentiation and negotiation. It teaches students to understand strategic interactions between different parties and enables them to make better decisions and outperform competition in the market.
It is important for students to take this module in order to develop analytical approach to reasonably complex business situations, as well as real-life challenges. At the end of the module students should have developed skills in the analytical and systematic use of strategic concepts and methods.

Content

Game theory analysis segment. Terminology structures games. Classification of games. Simultaneous games with pure strategy 1/2. Simultaneous games with pure strategy 2/2. Simultaneous games with mixed strategies. Sequential games 1/2. Sequential games 2/2. Uncertainty and information. Strategic moves. Evolutionary game theory. Auction. Price competition. Direct foreign investment. Hostile company takeover. Prevention of entering the market. Research and development (r and d) and patents.

Literature

Essential reading:
1. Kopal, R.; Korkut, D.: \\\"Uvod u teoriju igara – visokoškolski udžbenik\\\", Visoko učilište Effectus, 2012.
2. Osborne, M.J. (2009) Introduction to Game Theory. International edn. New York, NY: Oxford University Press
3. Jackson, Matthew O. (2011) A Brief Introduction to the Basics of Game Theory [Online] Available at SSRN: https://ssrn.com/abstract=1968579 or http://dx.doi.org/10.2139/ssrn.1968579

Recommended reading:
1. Dixit, A., Skeath, S. and McAdams, D. (2020) Games of Strategy. 5th edn. New York, NY: W. W. Norton and Company.
2. Carmichael, F. (2005) A Guide to Game Theory. 1st edn. Harlow: Financial Times Prentice Hall.

Further reading:
1. International Journal of Game Theory, Springer-Verlag GmbH, ISSN (online): 1432-1270
2. International Game Theory Review, World Scientific, ISSN (online): 1793-6675
3. Journal of Game Theory, SAP, ISSN (online): 2325-0054

Minimal learning outcomes

  • Identify segments of game theory and classify games.
  • Recommend ways of solving the problem of sequential games.
  • Recommend ways of solving the problem of simultaneous games with pure and mixed strategies
  • Recommend solving various problems of insecurity in the games.
  • Select the appropriate application of certain strategic moves.
  • Select the appropriate application of certain methods of game theory in marketing and business.

Preferred learning outcomes

  • Compare segments of game theory and classify games.
  • Defend opinion in practical problem solving of sequential games.
  • Support opinion on practical problem solving in term of simultaneous games with pure and mixed strategies
  • Defend opinion on the practical solution of problems of insecurity in the games.
  • Defend opinion in applying strategic moves.
  • Critically evaluate the practical application of methods of game theory in marketing and business.
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