Chapter 13 Game Theory and Competitive Strategy
Chapter 13 Game Theory and Competitive Strategy
Topics to be Discussed a Gaming and Strategic Decisions ■ Dominant strategies a The Nash Equilibrium Revisited a Repeated Games Chapter 13 Slide 2
Chapter 13 Slide 2 Topics to be Discussed ◼ Gaming and Strategic Decisions ◼ Dominant Strategies ◼ The Nash Equilibrium Revisited ◼ Repeated Games
Topics to be Discussed a Sequential Games a Threats, Commitments, and Credibility Entry Deterrence a Bargaining Strategy ■ Auctions Chapter 13 Slide 3
Chapter 13 Slide 3 Topics to be Discussed ◼ Sequential Games ◼ Threats, Commitments, and Credibility ◼ Entry Deterrence ◼ Bargaining Strategy ◼ Auctions
Gaming and Strategic Decisions a If l believe that my competitors are rational and act to maximize their own profits, how should take their behavior into account when making my own profit-maximizing decisions? Chapter 13 Slide 4
Chapter 13 Slide 4 Gaming and Strategic Decisions ◼ “If I believe that my competitors are rational and act to maximize their own profits, how should I take their behavior into account when making my own profit-maximizing decisions?
Gaming and Strategic Decisions Noncooperative versus Cooperative Games ● Cooperative Game Players negotiate binding contracts that allow them to plan joint strategies o EXample: Buyer and seller negotiating the rice of a good or service or a joint venture by two firms (i.e. Microsoft and Apple) e Binding contracts are possible Chapter 13 Slide 5
Chapter 13 Slide 5 Gaming and Strategic Decisions ◼ Noncooperative versus Cooperative Games ⚫ Cooperative Game ◆Players negotiate binding contracts that allow them to plan joint strategies ⚫ Example: Buyer and seller negotiating the price of a good or service or a joint venture by two firms (i.e. Microsoft and Apple) ⚫ Binding contracts are possible