Managerial Econmics Brickley, Smith, Zimmerman Chapter 9 Answers

Managerial Economics and Organizational Architecture

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Unformatted text preview: Bingo Canal Canal Canal Chapter 09 - Economics Of Strategy: Game Theory CHAPTER 9 ECONOMICS OF STRATEGY: GAME THEORY CHAPTER SUMMARY 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. CHAPTER OUTLINE GAME THEORY Academic Application: Game Theorists Win the Nobel Prize SIMULTANEOUS-MOVE, NONREPEATED INTERACTION Analyzing the Payoffs Dominant Strategies Managerial Application: Stocklifting—A Dominant Strategy? Nash Equilibrium Revisited Nash Equilibrium Identifying a Nash Equilibrium Management Implications Academic Application: Are Nash Equilibria Likely? Competition versus Coordination Managerial Application: Coordination Problems with HDTV Managerial Application: Indian Ice Cream Wars Mixed Strategies Academic Application: A Mixed Strategy at Wimbledon Managerial Implications Managerial Application: Failure to Consider Strategic Interactions—The Paper Industry SEQUENTIAL INTERACTION Extensive Form Backward Induction First-Mover Advantage Managerial Application: First-Mover Advantage—Walmart Strategic Moves Credibility Managerial Implications Managerial Application: Strategic Behavior—NBA 9-1 Chapter 09 - Economics Of Strategy: Game Theory REPEATED STRATEGIC INTERACTION Managerial Application: It Pays to Think Sequentially Managerial Application: Boeing and Airbus Accused of Price Collusion STRATEGIC INTERACTION AND ORGANIZATIONAL ARCHITECTURE Managerial Application: Auditing—A Mixed-Strategy Equilibrium SUMMARY Managerial Application: Key Managerial Insights from Game Theory APPENDIX: REPEATED INTERACTION AND THE TEAMMATES’ DILEMMA The Example Managerial Implications Appendix Problem TEACHING THE CHAPTER This chapter provides extended coverage of game theory, which is initially introduced in Chapter 6. Although the prisoner’s dilemma and Nash equilibrium are not new in this chapter, students will likely benefit from a review of these concepts before beginning coverage of the rest of the chapter. It is important for students to understand the differences between concepts in the chapter, but it is equally important for students to understand why this particular concept is different from the way firm’s decisions were analyzed in other chapters. What does this particular concept take into consideration that the analyses of other market structures do not? Rivals’ responses. The text provides numerous examples that can be covered or reviewed during class. numerous examples that can be covered or reviewed during class....
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Managerial Econmics Brickley, Smith, Zimmerman Chapter 9 Answers

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