There's an exciting new game at Mount Holyoke College, and the only equipment it requires is a pencil and paper. Economics 201, Games of Strategy, is a primarily nontechnical course introducing students to game theory, one of the newest and most broadly applied economics methodologies.
Visiting assistant professor Kimberly Katz, a newly minted PhD from the University of Pennsylvania, says game theory offers a better way to handle strategic interactions. "In business, those who consistently make better decisions are the ones who survive," she points out. The course makes the material applicable to life beyond business and economics. "We all make strategic decisions every day, whether we know it or not, so we might as well be good strategists," reasons Katz.
Katz explains game theory as a way of systematically thinking about interactions between people. The consequences of an individual's actions depend on the actions of others as well, so outcomes are based on all players' choices. Learning to think strategically requires understanding the fundamentals, then applying them to specific situations.
Katz uses eclectic examples, including business pricing decisions, how countries negotiate and sustain nuclear arms agreements, Congressional voting issues, sports, and even the classic O. Henry story, "The Gift of the Magi." Katz uses readings, problem sets, and game handouts in which students are awarded points for choosing winning strategies.
Junior Analisa Balares, a math and economics major, describes how they studied the example of crossing the street as if it were a game. "You calculate possible actions of players, doing simultaneous mental calculations. The outcome depends on everybody's choices." Elizabeth Beede '98 breaks down the thinking into moves: "Should I cross now and get to my destination quicker, or should I be safer by watching out for this car, but get there less quickly? The car's driver wonders if she will miss her dentist's appointment if she doesn't keep driving, but then she risks hitting the person crossing the street." Beede, who says she loves the class, was pleasantly surprised to hear from counselors at the Career Development Center that strategic skills are in demand by employers.
Balares says she "applies game theory all the time" in life. "It fosters a more intelligent way of thinking, and it's appealing to rational as well as more impulsive types because it offers a framework."
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