ES32039: Strategic decision making and incentives
[Page last updated: 01 August 2025]
| Academic Year: | 2025/26 |
| Owning Department/School: | Department of Economics |
| Credits: | 20 [equivalent to 40 CATS credits] |
| Notional Study Hours: | 400 |
| Level: | Honours (FHEQ level 6) |
| Period: |
- Academic Year
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| Assessment Summary: | CWPI 50%, EXCB 50% |
| Assessment Detail: |
- Project output Individual (CWPI 50%)
- Unseen exam (EXCB 50%)
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| Supplementary Assessment: |
- Like-for-like reassessment (where allowed by programme regulations)
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| Requisites: |
Before taking this module you must take ES22014 OR take ES20012
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| Learning Outcomes: |
At the end of this unit, students should be able to:
- Understand the different classes of games studied in, as well as the key equilibrium concepts proposed by game theory. Analyse these games and apply relevant game theoretic arguments to find equilibria of these games.
- Identify real-world situations of strategic interaction and construct corresponding game theoretic models.
- Analyse economic situations using game theoretic concepts and techniques, and evaluate the behavioural predictions generated by these concepts.
- Use judgement and abstraction to simplify complex real-world problems and make them amenable to systematic analysis.
- Solve problems rigorously by constructing careful arguments.
- Critical thinking and an understanding that observed phenomena may have counter-intuitive explanations
- Understand that game theory is an intellectual tool with assumptions and limitations, but one that allows us to systematically structure our thoughts and arguments.
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| Content: | Topics to be covered in the unit may include:
Static Games of Incomplete Information (such as Auctions, Revenue Equivalence, Risk Aversion, and Uncertainty, Reserve Prices, Common-Value Auctions and the Winner's Curse)
Dynamic Games with Incomplete Information and Perfect Bayesian Equilibrium
Strategic Information Transmission (such as Cheap Talk, Bayesian Persuasion, and Optimal Delegation)
Moral Hazard (such as Principal-Agent Models, Incentive Compatibility and Participation Constraints, Optimal Contracts)
Mechanism Design (such as Mechanisms and the Revelation Principle)
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| Synopsis:
| Learn how to construct predictions of individual strategic behaviour to uncover the mechanisms behind important economic, social, and political phenomena.
You will focus on applying advanced game theory techniques and equilibrium concepts in economics settings. These may include:
- Nash Equilibrium
- Backwards Induction
- Subgame-perfect Nash Equilibrium
- Bayes Nash Equilibrium.
You will also explore how strategic interactions and individual incentives are affected by uncertainty.
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| Course availability: |
ES32039 is Optional on the following courses:
Department of Economics
- UHES-AFB10 : BSc(Hons) Economics (Year 3)
- UHES-AAB03 : BSc(Hons) Economics with Study year abroad (Year 4)
- UHES-AKB03 : BSc(Hons) Economics with Year long work placement (Year 4)
- UHES-AFB12 : BSc(Hons) Economics and Mathematics (Year 3)
- UHES-AAB04 : BSc(Hons) Economics and Mathematics with Study year abroad (Year 4)
- UHES-AKB04 : BSc(Hons) Economics and Mathematics with Year long work placement (Year 4)
- UHES-ACB04 : BSc(Hons) Economics and Mathematics with Combined Placement and Study Abroad (Year 4)
- UHES-AAB01 : BSc(Hons) Economics and Politics with Study year abroad (Year 4)
- UHES-AKB01 : BSc(Hons) Economics and Politics with Year long work placement (Year 4)
- UHES-ACB01 : BSc(Hons) Economics and Politics with Combined Placement and Study Abroad (Year 4)
- UHES-ACB03 : BSc(Hons) Economics with Combined Placement and Study Abroad (Year 4)
- UHES-AFB11 : BSc(Hons) Economics with Politics (Year 3)
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Notes: - This unit catalogue is applicable for the 2025/26 academic year only. Students continuing their studies into 2026/27 and beyond should not assume that this unit will be available in future years in the format displayed here for 2025/26.
- 好色tv and units are subject to change in accordance with normal University procedures.
- Availability of units will be subject to constraints such as staff availability, minimum and maximum group sizes, and timetabling factors as well as a student's ability to meet any pre-requisite rules.
- Find out more about these and other important University terms and conditions here.
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