AEM 4190 - [Strategic Thinking]

Spring. 3 credits.

Prerequisite: Intermediate Microeconomics course such as AEM 2600, PAM 2000, ECON 3010, ECON 3030 (formerly 3130), or equivalents. Next offered 2014-2015.

N. H. Chau.

The art of thinking strategically puts outdoing one’s adversary at the core of the decision-making process, while anticipating that the adversary is doing exactly the same thing. Businesses make investment decisions and innovate products in anticipation of the reaction of their rivals; managers make pay contingent on peer performance, taking into account the reaction of their subordinates and superiors; national trade policies are formulated based on whether trading partners are committed to make credible concessions. This course introduces and explores the use of game theory to understand these interactions; students are expected to work with a balanced dose of both theory and relevant case studies. The objective of the course is to facilitate students’ ability to think strategically on firm level issues (e.g., pricing, advertising wars, product differentiation, and entry deterrence) and strategic policy interaction in international economic relations (e.g., trade wars and the arms race).