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Lecturer(s)
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Klicnarová Jana, doc. RNDr. Ph.D.
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Course content
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1 - Utility Theory. 2 - Monetary Utility Function. Estimation of utility function parameters. 3 - Introduction into Decision Theory. 4 - Decision under risk and uncertainty. 5 - Markowitz' model of portfolio optimization. 6 - Scenario approach to portfolio optimization. 7 - Bayes' formula. 8 - Prior and posterior probabilities. Value of experimetation and value of perfect information. 9 - Decision trees. 10 - Introduction into Game Theory. 11 - Antagonistic conflict, graphical solution, solving by LP method. 12 - Two-person nonconstant-sum games. 13 - Oligopolies. 14 - Simulation.
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Learning activities and teaching methods
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Monologic (reading, lecture, briefing), Dialogic (discussion, interview, brainstorming)
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Learning outcomes
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The course provides the first introduction into decision theory. After the basic notions of the subject have been explained, the main attention will be paid to the methods for solving problems with one or more decision criteria and/or resolving conflicting situations in the paradigms of game theory. Some specific items to be discussed: Optimization techniques and rules for decision problems with one decision criterion, e.g., mean-value, maxmin, Laplace, Savage rules, etc. Decision trees. Problems of Portfolio optimization. Basic notions of game theory; strategies, zero-sum games, etc. Pure and mixed strategies, linear programming methods. Nash equilibrium, cooperative and non-cooperative games.
The students will acquire basic understanding of the fundamentals of decision processes and game theory, including the underlying mathematical tools and software.
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Prerequisites
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The course has no prerequisities.
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Assessment methods and criteria
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Combined exam
Requirements for credit: duly submission of seminar works in Moodle system. Written and oral exam. It is necessary to have at least 50 percent of points from the exam test to pass the written part. To pass the oral part it is necessary to answer at least one of three questions.
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Recommended literature
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Ariely. Predictably Irrational: The Hidden Forces That Shape Our Decisions. Harper-Collins, 2008.
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FRIEBELOVÁ, J., KLICNAROVÁ, J. Rozhodovací modely pro ekonomy. EF JU, České Budějovice, 2007..
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Hansson. S. O. Decision Theory: A Brief Introduction.
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J. von Neumann and O. Morgenstern. Theory of Games and Economic Behavior. Princeton, NJ. Princeton University Press., 1944.
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K. Binmore. Fun and Games - A Text on Game Theory. D.C. Heath, Lexington, Mass, 1992.
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M. De Groot. Optimal Statistical Decisions. Wiley Classics Library (Originally published 1970.), 2004.
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R. Clemen. Making Hard Decisions: An Introduction to Decision Analysis. 2nd edition. Belmont CA: Duxbury Press, 1996.
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S. Karlin. Mathematical Methods and Theory in Games, Programming and Economics, in two vols.. Dover Publications Inc., New York, 1992.
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T. Ferguson. Game Theory, course notes.
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