BSZ_IM_Ch09_4e - Managerial Economics and Organizational...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Managerial Economics and Organizational Architecture Instructor’s Manual Part 1: Chapter Overview and Solutions Chapter 9: Page 1 CHAPTER 9 E CONOMICS OF S TRATEGY : G AME T HEORY This is the second chapter on the economics of strategy. Chapter 8 concentrates on the basic economics of value creation and capture, and the effects of competition in the marketplace. Chapter 9 uses game theory to analyze in greater detail interaction among a set of identifiable rivals. The chapter begins with an examination of simultaneous move games with nonrepeated interaction. Both pure and mixed strategies are presented. The chapter moves on to discuss sequential and repeated interactions. Repeated interactions are analyzed in greater detail in the appendix. Managerial implications are highlighted throughout the chapter and a mini-case is presented for discussion. C HAPTER O UTLINE G AME T HEORY S IMULTANEOUS -M OVE , N ONREPEATED I NTERACTION Analyzing the Payoffs Dominant Strategies Nash Equilibrium Revisited Competition versus Coordination Mixed Strategies Managerial Implications S EQUENTIAL I NTERACTION First-Mover Advantage Strategic Moves Managerial Implications R EPEATED S TRATEGIC I NTERACTION S TRATEGIC I NTERACTION AND O RGANIZATIONAL A RCHITECTURE C ASE S TUDY : H OLLAND S WEETNER VERSUS M ONSANTO S UMMARY A PPENDIX : R EPEATED I NTERACTION AND THE T EAMMATES D ILEMMA
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Managerial Economics and Organizational Architecture Instructor’s Manual Part 1: Chapter Overview and Solutions Chapter 9: Page 2 T EACHING THE C HAPTER We begin with a discussion of the concepts contained in the chapter. Some students find these concepts difficult when they first see them and benefit from lectures and doing problems. We use the Holland Sweetner versus Monsanto case for discussion. We end by stressing that while we have focused on simple, two-person games there are several important managerial implications that are very general. These include: Understand your business setting . Identify the relevant set of rivals and the nature of their interaction. What are their potential actions? What information will they have when they choose their actions? What are the consequences of their various actions? Is similar interaction among these rivals likely to be repeated either over time or across other markets? Place yourself behind your rival’s desk . Absent specific reasons to believe otherwise, assume that your rival is knowledgeable, thoughtful, and purposeful, and ensure that your forecast of its future actions are consistent with that assumption. Look forward, reason backward . Consider the entire sequence of decisions that are likely to be made over the course of this interaction. Look forward to the ultimate set of potential outcomes and then reason backward to determine your best strategy. This process identifies critical choices that your rivals face and highlights why you should understand the basis for their choices. With a first-mover advantage, move first
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

BSZ_IM_Ch09_4e - Managerial Economics and Organizational...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online