Strategic and Cooperative Decision Making

Coordinator: dr. J.R. van den Brink

prof. dr. ir. G. van der Laan
dr. J.R. van den Brink
dr. I.D. Lindner

Course objective

The aim of this course is to learn and apply methods and techniques from cooperative and noncooperative game theory to economic and managerial problems. Special attention will be given to the analysis and economic application of networks. Students should be able to understand and to apply results that recently appeared in the international journals.

Course content

In this course we study strategic and cooperative decision making in situations where more than one party or agent is involved. In these situations the outcome is the result of the individual decisions made by the agents. In strategic decision theory we focus on the decisions made by the agents, where each agent takes account of the fact that its decision influences the outcome, and therefore the decision problem of the other agents. Agents behave strategically if each agent tries to behave in a way that is best for itself. In cooperative decision theory we focus on the outcome (and not on the individual decisions), taking into account the interests of all agents. We study different criteria that an outcome can satisfy, such as efficiency or equity, and look how to find a compromise between these criteria when they are conflicting. The methods we use to analyze and solve these problems borrow from (non-cooperative and cooperative) game theory, general equilibrium theory and social choice theory. Topics that will be discussed come from the field of economics and operations research and include: bargaining problems, auctions, cost sharing and allocation problems, operations research games, market games, assignment problems, profit distribution, voting
problems, score rules, and location problems. Recently, various network models gained attention in the economic literature and applications. Therefore, in this course we give special attention to the analysis and economic application of networks.

Course reading

– Moulin, H., Fair Division and Collective Welfare. MIT Press, 2003.
– Lecture sheets, material from MOOC and a selection of recent articles from the literature

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