Game theory with applications to operations management

URL study guide

https://tue.osiris-student.nl/onderwijscatalogus/extern/cursus?cursuscode=1CM36&collegejaar=2025&taal=en

Description

Decision making by various entities can result in conflict or cooperation between these entities. Game theory deals with the mathematical modelling of these situations of conflict and cooperation and with the analysis of these models. We will provide a solid introduction to both cooperative game theory and noncooperative game theory. Subsequently, we will focus on several applications in the area of operations management.

Topics  

Noncooperative game theory  

• Introduction  
• Games in extensive form and games in strategic form  
• (Subgame perfect) Nash equilibrium  
• (Bi-)Matrix games  
• Applications: price and quantity competition, auctions , supply chain contracting (buyback, revenue sharing etc.), ...  

Cooperative game theory  

• Introduction  
• Basic properties of (practical) coalitional games  
• Core and balancedness  
• Single-valued solution concepts and its properties: Shapley value, nucleolus, t -value  
• Bargaining  
• Applications: (linear) production, cooperating newsvendors, sequencing, ...  

Objectives

Students should have a basic understanding of relevant concepts in both cooperative and noncooperative game theory. Additionally, they should be able to apply these basics to operations management issues.  

Method of Assessment

Written examination