20610 - DECISIONS AND ORGANIZATIONS

The mission of this course is to provide the master students with adequate logical skills to understand collective decisions and organizations’ decisions at all political levels. Electoral competition, committee decision making, legislative bargaining, government coalition formation processes, are all examples of important political decision making processes that require game theory in order to be comprehended and analyzed.

The course covers the following topics:

• Game theory basic tools and notions.
• Game theory applications in electoral competition, voting, legislative bargaining, public good provisions of voluntary nature, negotiations, government coalition formation processes, repeated interaction and stability.

• Analyze non-cooperative interaction between politicians in various contexts.
• Analyze the formation of collective decisions by majority rule or other criteria.
• Evaluate pros and cons of different electoral systems.
• Understand the causes of instability of government coalitions; understand the difficulty in obtaining efficient public good provision; internal conflicts of interests within organizations and between organizations.
• Understand the role of repeated interactions or stable environments.

• Anticipate the consequences of changes in voters’ preferences on party platforms in different institutional systems.
• Evaluate the stability of a party system and entry costs or incentives for new parties in different electoral systems.
• Evaluate the prospects for increased or decreased corruption and changes in distribution as a consequence of certain reforms in how decision making is conducted in political institutions.
• Analyze logically the strategic problem for politicians involved in negotiations.

• Face-to-face lectures
• Exercises (exercises, database, software etc.)
• Individual assignments

Given that the course aims to make the students able to analyze the decision-making processes formally and rigorously, I assign problem sets every two weeks, to be handed in three days after assignment, and such problem sets are evaluated as part of the final grade. Moreover, the TA extensively discusses these exercises, along with other possible related applications.

30% of the grade is problem sets, the rest is midterm (30%) and a final exam (40%). Attendance is highly recommended. 

The course aims to give the students the necessary tools to analyze rational and strategic decision making within organizations,  hence the use of game theory is necessary and the acquired knowledge of the game theory tools  is a key part of what needs to be tested for a proper evaluation of the learning of the students. As in previous years, there will be a midterm exam of one hour and a half with three or four questions of the problem-solving type and a similar second partial. There will also be  problem sets every two weeks, six in total in the semester, two of which will be randomly graded but all have to be turned in.

• M.J. OSBORNE, An Introduction to Game Theory, Oxford University Press, 2009.