MGT 599 u2013 WEEK 3 - MGT 599 WEEK 3 Game Theory and...

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MGT 599 – WEEK 3 Game Theory and Segmentation" Please respond to the following: Read the article titled “Game Theory” at . In the article, the authors discussed a classic case of game theory (zero-sum games) of the Prisoner’s Dilemma (PD). There are many variations of this game in use. Suggest the manner in which organizations could apply PD to their business’ strategy formulation. Provide support for your response. Cooperative, yet competitive outcomes is what the airline industry has dealt with in these past few years, especially with new entrants coming in and the increasing of airfare and baggage fees. Airlines could apply the prisoner’s dilemma to their organizations when they began to increase airfare and baggage fees to substantiate fuel costs and other maintenance issues associated with airline services in general, creating equilibrium. For example, Delta Airlines was the first company to increase airfare and baggage fees, with the expectation that other airlines in the industry would cooperate and follow suit in increasing their prices to show a unified front. However, if Delta was the only airline to increase its prices (dominant) and other competitors

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