PMTPG: H3 Game Theory

By Zacchaeus Chok (18S03O), Elizabeth Leong (18S06G) and Ling Young Loon (18S07A)

Game theory is hard to pin down. It originates from a fascinating line of economic thought, but feels more like a branch with its own roots. The H3 game theory module stands under the shadow of economics, but truthfully, the concepts of the subject stretch way further. The umbrella of game theory ponders over all of academia, spanning political science to evolutionary biology.

Nevertheless, the H3 programme at Singapore Management University (SMU) is taught with an economics slant and a bold mathematical undertone, seasoned with actual ‘games’ which we play in class. It is an esoteric mix: a class that involves differentiation, oligopolistic pricing, and dice rolling fun — all in a series of three-hour sessions. Think you’re game for that? Read on.

What class is like with the Professor

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Dr Massimiliano Landi

Professor Landi is genuine, earnest, and humorous, often poking fun at others. Or at his own Italian accent. He is an outsider to the A Level syllabus, but he makes every effort to make sure you catch up with what is being taught. The Professor’s classes are moderately paced but intensely thought provoking, and are sure to be enjoyable.

What is taught?

The course outline is structured according to the textbook Games of Strategy. Content may be divided into two parts: techniques and applications. “Techniques” refers to basic concepts and computation methods that you must know to explore the world of game theory. For this course, we focus more on the general techniques. These include computing Nash Equilibria from a given game (i.e., given a set of game rules, actions and their consequences, how will all players act to maximise their own utility?) and analysing games of information asymmetry.

Later on, we move on on to applications of these techniques, such as in auctions (yes, auctions are just another type of game!) Of course, this will probably vary in the coming semester, but the bulk of the content will likely be as we described.

How advanced is this compared to H2 Economics?

Perhaps the only overlap in syllabi is that of a firm’s pricing strategy. From there, Game Theory picks up and delves into the precise quantitative aspects of such games in the business world, among many other random applications (such as sports and card games). Other than that, Game Theory does not really seem to be hardcore economics, but rather a mathematical framework designed to analyse strategic thinking. Most of the coursework involves calculations, with technical explanations requiring the use of jargon as opposed to the qualitative explanations in essay-writing at the H2 level.

For instance, in H2 Economics you would learn about price competition versus collusion amongst oligopolistic firms. In Game Theory, from a set of hypothetical equations that relate a firm’s supply and demand, you will mathematically calculate how these oligopolistic firms decide prices under conditions of collusion versus competition. Later on, you will learn the conditions required for firms to continue colluding indefinitely.

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An example of a question you’ll probably do during your time in Game Theory.

In an intellectual sense, Game Theory is a step up from H2 Economics, as much of the content requires deeper thought processing than the relatively intuitive content of H2. If you appreciate the mathematical modelling of real-life situations and the careful analysis of such models, then Game Theory is for you.

How does this compare to H3 MOE Economics?

The million dollar question for all economics students. MOE’s H3 closes only in early December, where students sit for their final paper. Game theory is more succinct; students complete their final paper by May. Also, you get to mingle around with people from other schools, and attract confuzzled stares from twenty-oners when you tap into their SMU library.

There might be a small overlap between the two subjects as well; the MOE H3 touches on Game Theory as a model to analyse firm-level interaction. Still, as its name suggests, Game Theory tackles the full range of games with great depth.

H3 MOE Economics, similar to the H2 variant, emphasises qualitative analysis in essay-writing and case-study questions. The mode of assessment in Game Theory, however, is akin to a mathematics paper.

Is the course more suited to Arts or Science students?

Game Theory comprises a good deal of mathematics (see the next section for more exact information). A Science student would have more exposure to using mathematics in contexts outside of pure math, because of all the calculations required in Physics or Chemistry, and thus may have a slight advantage. But it truly is up to the individual, and Arts students can do just fine here, especially with a solid mastery of Mathematics.

Am I good enough to take Game Theory?

A good grasp of mathematics will be incredibly helpful, since more time is devoted to what all the math means in an economics context, rather than to the actual mathematical concept itself. No calculators are allowed in this class, but the arithmetic will not be complex. The required differentiation is simple, too – easy-to-understand examples will be given in class. You will only need to know enough integration to calculate the area underneath a graph.

Some probability concepts will be required, but you will be learning these in H2 Math around the same time it is taught in Game Theory anyway; these include concepts like distribution functions and Bayes’ rule. You should also be able to interpret graphs without an excessive amount of effort, and be comfortable with drawing linear graphs from equations. If axes or handling multiple variables confuse you, you will have a slightly harder time.

In short, as long as you have the hunger for some intellectual rigour, coupled with the palate for highly quantitative (and rational) thinking, go ahead.

Is the workload manageable?

Game Theory demands a lot of independent thinking. With the limited time available, the professor covers the general concepts and leaves us to figure out other components (which are unfortunately testable too). However, with the aid of the textbook, and the poise of a strategist, you will become more comfortable with the thinking soon enough. Professor Landi often encourages us to use Game Theory concepts outside the classroom – doing so will probably help you adjust to this mode of thinking more quickly, too.

This course is highly manageable, homework-wise: we had a grand total of four short assignments in the same number of months.

Practical advice

Do borrow the textbook. It is the 2014 edition of Games of Strategy by Avinash K. Dixit, Susan Skeath, and David H. Reiley Jr. Be sure to read the chapters in the middle (say, chapter 5, 6, 7, or 8) to find out what you’re truly in for, as the earlier chapters are comparatively and deceptively easier.

If you do get into the H3, read the relevant textbook chapters either before or after class. The Professor follows the textbook very closely, down to the examples given in them. Also, get a larger (A4) notebook. You will likely want to take notes, and they will sometimes involve drawing rather large diagrams.

In conclusion

Provided you have the interest in this subject and the correct attitude, Game Theory has the potential to be a very enriching experience for you. We wish you all the best in your efforts to get into the programme if you desire to do so.

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