Foundations of Decision Theory

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Course Objective

The course builds on microeconomic and mathematical tools to formalize decision-making by economic agents under different environments, e.g. framing, uncertainty, competitive bidding, tacit collusion etc. Starting from the basic models of consumer’s behavior, the course aims to build advanced theoretical tools to analyze behavioral aspects of physical and virtual market. Various cases (e.g. online purchase, e-auctions, spectrum auctions, tacit business-links etc.) from recent marketing literature would be analyzed with respect to decision-theoretic tools established in the course.

Course Content

The course aims to formalize microeconomic treatment of decision-making by economic agents. It will encompass consumer's choice problems, rationality theory and also bounded rationality theory. The course will conceptualize behavioural aspects of firm's decision-making- non-cooperation strategies and cartel formation would be discussed with respect to various market structures. Basic ideas of auction models would also be discussed and reference would be made to e-auctions and spectrum (or natural resource) auction markets. Latest developments in social and economic networks would be introduced and behavioural underpinnings would be discussed.

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