Strategy Games Ch13

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  • Topic: Game theory, Nash equilibrium, Prisoner's dilemma
  • Pages : 30 (7114 words )
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  • Published : April 24, 2013
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Chapter 12: Routes to success: a strategic perspective.

1. Introduction2

2. Game theory introduced3

2.1 Origins of game theory3

3.2 Game theory: some notation4
3.2.1 Players, strategies, payoffs4
3.2.2 Simultaneous and sequential games4

3.3 A sequential move game5
Figure 10.2 A market entry game5

3.4 A simultaneous move game5
3.4.1 The game specified6
Figure 10.3 A two-player price choice game.6
3.4.2 Modes of play: non co-operative versus co-operative games6 3.4.3 The non co-operative solution7
3.4.3.1 Dominant strategies7
3.4.3.2 Nash Equilibrium7
3.4.4 The co-operative solution and its sustainability8
3.4.4.1 Co-operation through a binding agreement8

3.5 Games in which one player does not have a dominant strategy8 Figure 10.4 A two-firm innovation game.9
Box 10.2 A variety of types of games9

3.6 Using strategic moves to try and gain an advantage9
3.6.1 Commitments9
3.6.2 Threats and promises10
3.6.3 Warnings and assurances10
3.6.4 Importance of credibility10
3.6.5 Sequential games again10

3.7 Co-operation revisited10
3.7.1 Role of third party enforcers10
3.7.2 Public policy10
3.7.3 Commitments10
3.7.4 Linkage benefits and costs and reciprocity10
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-operation11
3.7.7 Other forms of co-operation12
3.7.7.1 Co-operation over deterrence of new entry12
3.7.7.2 Price leadership12
3.7.7.3 Avoidance of price competition: use of non-price competition12 3.7.7.4 Agree about standards12

3.8 When to compete and when to collaborate12
Figure 10.10 The value net13
3.8.1 Added value13

3.9 Seeking a competitive advantage by management of 5 forces13

Learning outcomes14

Discussion questions14

Tasks & Problems14

Further reading14

Web links14

Case Study: APS cameras ??14
Figure 10.5 A two-player Chicken game.15
Figure 10.6 Extensive form of the Chicken game.16
Figure 10.7 A two-player Assurance game.16
Figure 10.1. The Strategy Clock and a possible change in strategic positioning.17

Chapter 10: Routes to success: a game strategic perspective.

'Strategic thinking is the art of outdoing an adversary knowing that the adversary is trying to outdo you.'

Dixit & Nalebuff: Thinking Strategically, 1991

Learning objectives
Keywords

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| Y |Compete |Co-operate |SCA |Dominate | | | | | | | |X | | | | | |Compete |3, 3 |5, 0 |0, 8 |0, 9 | |Co-operate |0, 5 |7, 7 |3, 8 |0, 9 | |SCA |8, 0 |8, 3 |6, 6 |0, 9 | |Dominate |9, 0 |9, 0 |9, 0 |1, 1 |

| Y |Compete |Co-operate |SCA |Dominate | | | | | | | |X | | | | | |Compete |3, 3 | |...
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