Strategy Games Ch13
Chapter 12: Routes to success: a strategic perspective.
1. Introduction 2
2. Game theory introduced 3
2.1 Origins of game theory 3
3.2 Game theory: some notation 4 3.2.1 Players, strategies, payoffs 4 3.2.2 Simultaneous and sequential games 4
3.3 A sequential move game 5 Figure 10.2 A market entry game 5
3.4 A simultaneous move game 5 3.4.1 The game specified 6 Figure 10.3 A two-player price choice game. 6 3.4.2 Modes of play: non co-operative versus co-operative games 6 3.4.3 The non co-operative solution 7 3.4.3.1 Dominant strategies 7 3.4.3.2 Nash Equilibrium 7 3.4.4 The co-operative solution and its sustainability 8 3.4.4.1 Co-operation through a binding agreement 8
3.5 Games in which one player does not have a dominant strategy 8 Figure 10.4 A two-firm innovation game. 9 Box 10.2 A variety of types of games 9
3.6 Using strategic moves to try and gain an advantage 9 3.6.1 Commitments 9 3.6.2 Threats and promises 10 3.6.3 Warnings and assurances 10 3.6.4 Importance of credibility 10 3.6.5 Sequential games again 10
3.7 Co-operation revisited 10 3.7.1 Role of third party enforcers 10 3.7.2 Public policy 10 3.7.3 Commitments 10 3.7.4 Linkage benefits and costs and reciprocity 10 Figure 10.8 A one shot Prisoners’ Dilemma game. 11 Figure 10.9 The two-shot Prisoners’ Dilemma game. 11 3.7.6 The chances of successful co-operation 11 3.7.7 Other forms of co-operation 12 3.7.7.1 Co-operation over deterrence of new entry 12 3.7.7.2 Price leadership 12 3.7.7.3 Avoidance of price competition: use of non-price competition 12 3.7.7.4 Agree about standards 12
3.8 When to compete and when to collaborate 12 Figure 10.10 The value net 13 3.8.1 Added value 13
3.9 Seeking a competitive advantage by management of 5 forces 13
Learning outcomes 14
Discussion questions 14
Tasks & Problems 14
Further reading 14
Web
1. Introduction 2
2. Game theory introduced 3
2.1 Origins of game theory 3
3.2 Game theory: some notation 4 3.2.1 Players, strategies, payoffs 4 3.2.2 Simultaneous and sequential games 4
3.3 A sequential move game 5 Figure 10.2 A market entry game 5
3.4 A simultaneous move game 5 3.4.1 The game specified 6 Figure 10.3 A two-player price choice game. 6 3.4.2 Modes of play: non co-operative versus co-operative games 6 3.4.3 The non co-operative solution 7 3.4.3.1 Dominant strategies 7 3.4.3.2 Nash Equilibrium 7 3.4.4 The co-operative solution and its sustainability 8 3.4.4.1 Co-operation through a binding agreement 8
3.5 Games in which one player does not have a dominant strategy 8 Figure 10.4 A two-firm innovation game. 9 Box 10.2 A variety of types of games 9
3.6 Using strategic moves to try and gain an advantage 9 3.6.1 Commitments 9 3.6.2 Threats and promises 10 3.6.3 Warnings and assurances 10 3.6.4 Importance of credibility 10 3.6.5 Sequential games again 10
3.7 Co-operation revisited 10 3.7.1 Role of third party enforcers 10 3.7.2 Public policy 10 3.7.3 Commitments 10 3.7.4 Linkage benefits and costs and reciprocity 10 Figure 10.8 A one shot Prisoners’ Dilemma game. 11 Figure 10.9 The two-shot Prisoners’ Dilemma game. 11 3.7.6 The chances of successful co-operation 11 3.7.7 Other forms of co-operation 12 3.7.7.1 Co-operation over deterrence of new entry 12 3.7.7.2 Price leadership 12 3.7.7.3 Avoidance of price competition: use of non-price competition 12 3.7.7.4 Agree about standards 12
3.8 When to compete and when to collaborate 12 Figure 10.10 The value net 13 3.8.1 Added value 13
3.9 Seeking a competitive advantage by management of 5 forces 13
Learning outcomes 14
Discussion questions 14
Tasks & Problems 14
Further reading 14
Web