UGEB2530 Games and Strategic Thinking (2011-2012)

Every Thursday 2:35pm-5:00pm (including 10-min break) at L5, Science Centre.

Office Hours: Thursday 11:30pm - 12:15pm. Please write to me or call me (3943-7970) first if possible.

Grader: Tianming Wang, Rm 101, Lady Shaw Building

About the course:

From the simple "scissors, paper, and stone" game to the complex buy-and-sell financial decisions, we encounter games in our everyday life. While you are trying to figure out what your opponents are doing, they are trying to figure out what you are doing too. To maximize your outcome, you may want to cooperate or compete with all or some of them. Game theory is a way to analyze what rational people like you and me should do under these circumstances, and what the expected outcome will be if optimal strategies are followed.

The aim of this course is to provide students with a non-technical exploration of game theory. Required background in mathematics are addition, subtraction, and multiplication. (Well, we may need few divisions somewhere in the course though.) Required materials in mathematics will then be covered in the beginning of the course.

We will start with very simple parlor games to more realistic problems in economics, social psychology, biology, and business, where optimal strategies that are against intuition will be epitomized. In particular, the celebrated "Nash equilibrium" glossed over by Russell Crowe in the movie "A Beautiful Mind" will be explained in full detail in simple mathematical terms.

Teaching Schedule:

• Weeks 1-2: An Overview of Game Theory -- a power-point presentation
• Weeks 3-4: Mathematical Background
• Weeks 5: What is Game Theory?
• Weeks 6-8: Two-person Zero-Sum Games
  
• Week 9: General m-by-n Matrix Games/Sequential Games
• Week 10: Test and Lab Class on Week 10 (March 22)
  
• Week 11: Sequential Games
• Week 12: No class on Week 12 (April 5)
• Weeks 13-14: Two-person Nonzero-sum Games
  
• Week 15: N-person Cooperative Games (Supplementary class on April 23 (Monday) from 2:30pm to 5:30pm at L3, Science Centre)

Text books:

• Game and Strategic Thinking, Lecture notes prepared by Raymond Chan.
• Game Theory and Strategy, by Philip Straffin, AMS, 1993. (We will basically follow this book.)

• Applied Mathematics for Business, Economics and the Social Sciences, by Frank S. Budnick, McGraw Hill International, 1993.
  (This is a book for students who need for background information on matrices and probability.)
• Game Theory, A Nontechnical Introduction, by Morton D. Davis, Dover Publication Inc., 1970.
  (This book makes a good reading, non-technical, easy to read.)
• Strategy and Conflict: An Introductory Sketch of Game Theory.
  (This on-line lecture notes provides excellent background information on Game Theory and a whole lot of examples.)
• Operations Research, An Introduction, by H. Taha, 6th Ed., Maxwell Macmillan, 1997.
  (This book covers the 2-person zero-sum games in some depth. Good for students who wants to know more about the topic.)
• Fun and Games -- A Text on Game Theory, by Ken Binmore, D.C. Heath and Company, 1992.
  (This book is good for those who have finished this course, but still want to know more about games.)

Lecture notes, assignments, and solutions

Grade:

• In-class games = 5%
  In-class gamesheets should be handed in to the teacher at the end of the class. Late submissions will not be accepted.
• Four assignments = 20% (Weeks 4, 7, 10, 13)
  Solutions will be uploaded right after due date. So no late homeworks will be accepted.
• One 1.5-hour open-book test = 25% (March 22 from 2:35pm to 4:05pm)
  
• Open-book final examination = 50% (centrally scheduled)