Details

Analyzing Strategic Behavior in Business and Economics

A Game Theory Primer

von: Thomas J. Webster
CHF 47.00
Verlag:	Lexington Books
Format:	EPUB
Veröffentl.:	07.02.2014
ISBN/EAN:	9780739186053
Sprache:	englisch
Anzahl Seiten:	299

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Beschreibungen

Titelbeschreibung

This textbook is an introduction to game theory, which is the systematic analysis of decision-making in interactive settings. Game theory can be of great value to business managers. The ability to correctly anticipate countermove by rival firms in competitive and cooperative settings enables managers to make more effective marketing, advertising, pricing, and other business decisions to optimally achieve the firm’s objectives. Game theory does not always accurately predict how rivals will act in strategic situations, but does identify a decision maker’s best response to situations involving move and countermove. As Nobel Prize winner Thomas Shelling noted: “We may wish to understand how participants actually do conduct themselves in conflict situations; an understanding of the ‘correct’ play may give us a bench mark for the study of actual behavior.” The concise and axiomatic approach to the material presented in this textbook is easily accessible to students with a background in the principles of microeconomics and college mathematics. The selection and organizations of topics makes the textbook appropriate for use in a wide range of curricula by students with different backgrounds.

Titelkurzbeschreibung

This innovative textbook is a concise and axiomatic introduction to the principles of game theory—the formal study of move and countermove. Undergraduate business and economics students with a background in the principles of microeconomics and college mathematics will find the material presented in this textbook focused, comprehensive, and accessible.

Inhaltsverzeichnis

PREFACE
 
1INTRODUCTION TO GAME THEORY
 
Introduction
 
Strategic behavior
 
Short history of game theory
 
Lexicon of game theory
 
Rational versus actual behavior
 
Practice Exercises
 
PART I: STATIC GAMES WITH COMPLETE INFORMATION
 
2COALITION GAMES
 
Introduction
 
Prisoner’s dilemma
 
The extensive form
 
The normal form
 
Nash equilibrium
 
Shortcut for finding-pure strategy Nash equilibria
 
Determinants of business collusion
 
Number of firms with similar interests
 
Firm size relative to the industry
 
Visibility
 
Practice Exercises
 
3STRATEGIC MOVES AND DETERRING DEFECTION
 
Introduction
 
Strategic moves
 
Deterring defection
 
Contracts
 
Reputation
 
Cutting off communications
 
Preventing retreat
 
Brinksmanship
 
Incrementalism
 
Teamwork
 
Agents
 
Practice exercises
 
4COMPETITION GAMES
 
Introduction
 
Strictly-dominant strategies
 
Weakly-dominant strategies
 
Iterated elimination of dominated strategies
 
Three-player games
 
Non-dominant strategies
 
Maximin (secure) strategy
 
Practice exercises
 
5COORDINATION GAMES
 
Introduction
 
Battle-of-the-sexes game
 
Focal-point equilibrium
 
Developing a theory of focal-point equilibria
 
Framing
 
Practice Exercises
 
6INFINITELY-REPEATED GAMES
 
Introduction
 
Coalitions
 
Repeated static games
 
Trigger strategies
 
Evaluating payoffs in infinitely-repeated games
 
Practice Exercises
 
7FINITELY-REPEATED GAMES
 
Introduction
 
Finitely-repeated games with a certain end
 
End-of-game problem
 
Finitely-repeated games with an uncertain end
 
A word of caution
 
Concluding remarks
 
Practice Exercises
 
8EVOLUTION GAMES
 
Introduction
 
Evolutionary game theory
 
Reproductive success
 
Evolutionary equilibrium
 
Networks
 
Positive feedback effects
 
Network game
 
Implications
 
Practice Exercises
 
9TIT-FOR-TAT
 
Introduction
 
Tit-for-tat
 
End-of-game problem
 
Practice Exercises
 
10MIXING PURE STRATEGIES
 
Introduction
 
Zero-sum games
 
Matching pennies
 
Minimax theorem
 
Mixed strategies
 
Optimal mixing rules
 
Calculating optimal mixing rules
 
When to use optimal mixing rules
 
How to use optimal mixing rules
 
Bluffing
 
Practice Exercises
 
11.CONTINUOUS STRATEGIES
 
Introduction
 
Continuous strategies
 
Best-response (reaction) functions
 
Tragedy of the commons
 
Shifting best-response functions
 
Practice Exercises
 
12.STATIC OLIGOPOLY GAMES
 
Introduction
 
Cournot model
 
Advertising in a Cournot setting
 
Bertrand model
 
Bertrand paradox
 
Practice Exercises
 
13.STRATEGIC TRADE POLICY
 
Introduction
 
Discrete pure strategies
 
Continuous pure strategies
 
National welfare
 
Intraindustry trade
 
Imperfect competition
 
Intraindustry coalitions
 
Export subsidies
 
Reciprocity
 
Practice Exercises
 
14.PRODUCT DIFFERENTIATION
 
Introduction
 
Horizontal differentiation
 
Vertical differentiation
 
Location
 
Product differences
 
Practice exercises
 
15.STRATEGIC COMPLEMENTS
 
Introduction
 
Double marginalization
 
Practice exercises
 
PART II: DYNAMIC GAMES WITH COMPLETE AND PERFECT INFORMATION
 
16.GAME TREES
 
Introduction
 
Game trees
 
Subgame perfection
 
Backward induction
 
Credible threats
 
First-mover advantage
 
Entry deterrence
 
Practice Exercises
 
17.A DYNAMIC OLIGOPOLY GAME
 
Introduction
 
Stackelberg model
 
Practice Exercises
 
18.BARGAINING
 
Introduction
 
The bargaining problem
 
Ultimatum bargaining
 
Ultimatum paradox
 
Nash bargaining
 
Rubenstein bargaining
 
Last-mover’s advantage
 
Symmetric impatience
 
Asymmetric impatience
 
Practice Exercises
 
PART III: GAMES WITH INCOMPLETE INFORMATION
 
19.DECISION MAKING AND UNCERTAINTY
 
Introduction
 
Risk and uncertainty
 
Static games with uncertain payoffs
 
Static games in extensive form
 
Dynamic games with uncertain payoffs
 
Attitudes towards risk
 
Risk aversion
 
Understanding risk-averse behavior
 
Practice Exercises
 
20.ADVERSE SELECTION
 
Introduction
 
The market for lemons
 
Practice Exercises
 
21.INCENTIVE CONTRACTS
 
Introduction
 
Principal-agent problem
 
Incentive contracts
 
Principal-agent problem with moral hazard
 
Practice Exercises
 
PART IV: GAMES WITH IMPERFECT INFORMATION 
 
22.INFORMATION SETS
 
Introduction
 
Information sets
 
Bayesian updating
 
Practice Exercises
 
23.AUCTIONS
 
Introduction
 
Types of auctions
 
Information structures
 
Complete-information auctions
 
Sealed-bid, first-price auction
 
Sealed-bid, second-price auction
 
English auction
 
Dutch auction
 
Expected revenues from complete-information auctions
 
Incomplete-information auctions with independent private values
 
Sealed-bid, first-price auction
 
Sealed-bid, second-price auction
 
English auction
 
Dutch auction
 
Expected revenues from incomplete-information auctions with independent private values
 
Incomplete-information auctions with correlated value estimates
 
Common-value auctions and the winner’s curse
 
Incomplete-information auctions and risk aversion
 
Practice exercises
 
24.SIGNALING
 
Introduction
 
Spence education game
 
Pooling strategy
 
Separating strategy
 
Corporate investment game
 
Multiple subgame-perfect Bayesian equilibria
 
Practice Exercises
 
25.SCREENING
 
Introduction
 
Self-selection
 
Spence education game in reverse
 
Practice Exercises
 
APPENDICES
 
REFERENCES AND SUGGESTIONS FOR FURTHER READING
 
INDEX

Autorenportrait

Thomas J. Webster is a professor of economics in the Department of Finance and Economics of Pace University’s Lubin School of Business in New York City. Before joining the faculty at Pace University, Dr. Webster held positions as an international economist with the Central Intelligence Agency, the U.S. Department of Defense, Manufacturers Hanover Trust Company, and Continental Illinois National Bank and Trust Company. Dr. Webster has served as graduate and undergraduate finance program chair, and as faculty advisor to Beta Gamma Sigma, the international honor society for collegiate schools of business. He is the recipient of the Lubin School of Business Scholarly Research Award for Basic Scholarship, the Lubin School of Business Outstanding Faculty Service Award, the Pace University Award for Distinguished Service, and the Beta Gamma Sigma Commitment to Excellence Award. Dr. Webster received his BA from the School of International Service of American University, and his MA, MPhil, and PhD from the City University of New York.