Chapter 10 - Game theory and competitive strategy. In this context, we could just as well call our approach strategic profit analysis. Nonetheless, the more general term, game theory, remains apt. This name emphasizes the kind of logical analysis evident in games of pure strategy - chess, poker, even war games.
Managerial Economics, 8e William F. Samuelson ● Stephen G. Marks Chapter Ten Game Theory and Competitive Strategy Copyright © 2015 John Wiley & Sons, Inc. All rights reserved It is a remarkable fact that business strategies are played largely in the mind. Only a small part of the play appears in overt action. Its full scope and depth lie in the payers’ looking backward and forward and running through their minds their alternative moves and countermoves ~John McDonald, The Game of Business Copyright © 2015 John Wiley & Sons, Inc. All rights reserved For Discussion A Battle for Air Passengers Three airlines (A, B, and C) are competing for passengers on a lucrative longhaul air route Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Sizing up competitive situations Elements common to all competitive situations: Players and Their Actions Outcomes and Payoffs Underlying “Rules” Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Sizing up competitive situations Elements that differ across competitive situations: Number of Competitors Degree of Mutual Interest Communication and Agreement among Competitors Repeated or OneShot Competition Amount of Information Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Analyzing payoff Tables Jockeying in the TV Ratings Game Equilibrium Strategies MarketShare Competition The Prisoner’s Dilemma Once Again Two Tiered Tender Offers Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Competitive Strategy A Common Standard for HighDefinition DVDs The Platform Wars Continue Market Entry Bargaining Bargaining Over the Terms of a Transaction Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Competitive Strategy Sequential Competition An International Mineral Lease Entry Deterrence Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 10.1 Moving Toward an International Agreement Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 10.2 Deterring Entry Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Competitive Strategy Repeated Competition Repeated Price Competition Other Aspects of Reputation A Final Note on Finite Competition A Battle for Air Passengers Revisited Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Appendix to Chapter 10 MIXED STRATEGIES Market Competition Revisited A Game of Trust Copyright © 2015 John Wiley & Sons, Inc. All rights reserved ... Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 10. 1 Moving Toward an International Agreement Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 10. 2 Deterring Entry Copyright © 2015 John Wiley & Sons, Inc. All rights reserved... A Battle for Air Passengers Revisited Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Appendix to Chapter 10 MIXED STRATEGIES Market Competition Revisited A Game of Trust Copyright © 2015 John Wiley & Sons, Inc. All rights reserved