Decisions(策略决策).ppt

1、Chapter 10 Game Theory and Competitive Strategy,Guan Xizhan School of Management, Fudan University E-Mail: ,1,Topics to be Discussed,Gaming and Strategic Decisions（策略决策） Dominant Strategies（上策，占优策略） The Nash Equilibrium Revisited Repeated Games（重复博弈）,2,Topics to be Discussed,Sequential Games（序贯博弈） T

2、hreats, Commitments, and Credibility（威慑、承诺与可信性） Entry Deterrence（进入阻止，进入威慑） Bargaining Strategy（讨价还价策略）,3,Gaming and Strategic Decisions,“If I believe that my competitors are rational and act to maximize their own profits, how should I take their behavior into account when making my own profit-maxim

3、izing decisions?”,4,Gaming and Strategic Decisions,Noncooperative versus Cooperative Games Cooperative Game（合作博弈） Players negotiate binding contracts（有约束力的契约） that allow them to plan joint strategies Example: Buyer and seller negotiating the price of a good or service or a joint venture by two firms

4、 (i.e. Microsoft and Apple) Binding contracts are possible,5,Gaming and Strategic Decisions,Noncooperative versus Cooperative Games Noncooperative Game Negotiation and enforcement of a binding contract are not possible Example: Two competing firms assuming the others behavior determine, independentl

5、y, pricing and advertising strategy to gain market share Binding contracts are not possible,6,Gaming and Strategic Decisions,Noncooperative versus Cooperative Games “The strategy design is based on understanding your opponents point of view, and (assuming you opponent is rational) deducing how he or

6、 she is likely to respond to your actions”,7,Gaming and Strategic Decisions,An Example: How to buy a dollar bill 1)Auction a dollar bill 2)Highest bidder receives the dollar in return for the amount bid 3)Second highest bidder must pay the amount he or she bid Question: How much would you bid for a

7、dollar?,8,Acquiring a Company,Scenario Company A: The Acquirer Company T: The Target A will offer cash for all of Ts shares What price to offer?,9,Acquiring a Company,Scenario The value of T depends on the outcome of a current oil exploration project. Failure: Ts value = $0 Success: Ts value = $100/

8、share All outcomes are equally likely,10,Acquiring a Company,Scenario Ts value will be 50% greater with As management. A, must submit the proposal before the exploration outcome is known. T will not choose to accept or reject until after the outcome is known only to T. How much should A offer?,11,Do

9、minant Strategies,Dominant Strategy One that is optimal no matter what an opponent does. An Example A depends on Bs actions B: Advertise Question What should A do? (Hint: consider Bs decision,18,The Nash Equilibrium Revisited,Dominant Strategies “Im doing the best I can no matter what you do.” “Your

10、e doing the best you can no matter what I do.”,19,The Nash Equilibrium Revisited,Nash Equilibrium “Im doing the best I can given what you are doing” “Youre doing the best you can given what I am doing.”,20,Examples With A Nash Equilibrium Two cereal companies Market for one producer of crispy cereal

11、 Market for one producer of sweet cereal Each firm only has the resources to introduce one cereal Noncooperative,The Nash Equilibrium Revisited,Product Choice Problem,21,Product Choice Problem,Firm 1,Crispy,Sweet,Crispy,Sweet,Firm 2,22,Product Choice Problem,Question Is there a Nash equilibrium? If

12、not, why? If so, how can it be reached,23,Beach Location Game,Scenario Two competitors, Y and C, selling soft drinks Beach 200 yards long Sunbathers are spread evenly along the beach Price Y = Price C Customer will buy from the closest vendor,24,Beach Location Game,Where will the competitors locate

13、(i.e. where is the Nash equilibrium)?,25,Beach Location Game,2)Examples of this decision problem include: Locating a gas station Presidential elections,26,The Nash Equilibrium Revisited,Maximin Strategies（最大最小策略） Scenario Two firms compete selling file-encryption software They both use the same encr

14、yption standard (files encrypted by one software can be read by the other - advantage to consumers),27,The Nash Equilibrium Revisited,Maximin Strategies Scenario Firm 1 has a much larger market share than Firm 2 Both are considering investing in a new encryption standard,28,Maximin Strategy,Firm 1,D

15、ont invest,Invest,Firm 2,Dont invest,Invest,29,Maximin Strategy,Observations Dominant strategy Firm 2: Invest Nash equilibrium Firm 1: invest Firm 2: Invest,30,Maximin Strategy,Observations If Firm 2 does not invest, Firm 1 incurs significant losses Firm 1 might play dont invest Minimize losses to 1

16、0: maximin strategy,31,If both are rational and informed Both firms invest Nash equilibrium,The Nash Equilibrium Revisited,Maximin Strategy,32,Consider If Player 2 is not rational or completely informed Firm 1s maximin strategy is to not invest Firm 2s maximin strategy is to invest. If 1 knows 2 is

17、using a maximin strategy, 1 would invest,The Nash Equilibrium Revisited,Maximin Strategy,33,Prisoners Dilemma,Prisoner A,Confess,Dont Confess,Confess,Dont Confess,Prisoner B,34,Prisoners Dilemma,What is the: Dominant strategy Nash equilibrium Maximin solution,35,Pure Strategy（纯策略） Player makes a spe

18、cific choice Mixed Strategy（混合策略） Player makes a random choice among two or more possible actions based on a set of chosen probabilities,The Nash Equilibrium Revisited,Mixed Strategy,36,Matching Pennies（猜硬币）,Player A,Heads,Tails,Heads,Tails,Player B,37,Matching Pennies,Observations Pure strategy: No

19、 Nash equilibrium Mixed strategy: Random choice is a Nash equilibrium Would a firm set price based on random choice assumption?,38,The Battle of the Sexes,Boy,Football,Movie,Football,Movie,Girl,39,The Battle of the Sexes,Pure Strategy Both play (watch) football Both watch movie Mixed Strategy Boy ch

20、ooses football Girl chooses movie,40,Repeated Games,Oligopolistic firms play a repeated game. With each repetition of the Prisoners Dilemma, firms can develop reputations about their behavior and study the behavior of their competitors.,41,Pricing Problem,Firm 1,Low Price,High Price,Low Price,High P

21、rice,Firm 2,42,Pricing Problem,Non-repeated game Strategy is Low1, Low2 Repeated game Tit-for-tat strategy is the most profitable,43,Repeated Games,Conclusion: With repeated game The Prisoners Dilemma can have a cooperative outcome with tit-for-tat strategy,44,Repeated Games,Conclusion: This is most

22、 likely to occur in a market with: Few firms Stable demand Stable cost,45,Repeated Games,Conclusion Cooperation is difficult at best since these factors may change in the long-run.,46,Oligopolistic Cooperationin the Water Meter Industry,Characteristics of the Market Four Producers Rockwell Internati

23、onal (35%), Badger Meter, Neptune Water Meter Company, and Hersey Products (Badger, Neptune, and Hersey combined have about a 50 to 55% share),47,Oligopolistic Cooperationin the Water Meter Industry,Characteristics of the Market Very inelastic demand Not a significant part of the budget,48,Oligopoli

24、stic Cooperationin the Water Meter Industry,Characteristics of the Market Stable demand Long standing relationship between consumer and producer Barrier Economies of scale Barrier,49,Oligopolistic Cooperationin the Water Meter Industry,Characteristics of the Market This is a Prisoners Dilemma Lower price to a competitive level Cooperate Repeated