Tsinghua_2005MBA_Lecture_13(Game theory and competitive strategy)(ppt 134页)(英文).ppt

1、,Lecture 13,Game Theory and Competitive Strategy,Lecture 13,Slide 2,Topics to be Discussed,Gaming and Strategic Decisions Dominant Strategies The Nash Equilibrium Repeated Games,Lecture 13,Slide 3,Topics to be Discussed,Sequential Games Threats, Commitments, and Credibility Entry Deterrence Bargaini

2、ng Strategy Auctions,Lecture 13,Slide 4,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-maximizing decisions?”,Lecture 13,Slide 5,Gaming and Strategic Decision

3、s,Noncooperative versus Cooperative Games Cooperative Game Players negotiate binding contracts 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 (i.e. Microsoft and Apple) Binding contracts are possible,Lectu

4、re 13,Slide 6,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, independently, pricing and advertising strategy to gain mar

5、ket share Binding contracts are not possible,Lecture 13,Slide 7,Gaming and Strategic Decisions,Noncooperative versus Cooperative Games “The strategy design is based on understanding your opponents point of view, and (assuming your opponent is rational) deducing how he or she is likely to respond to

6、your actions”,Lecture 13,Slide 8,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,Lecture 13,Slide 9,Gaming and Strategic Decisions,An Example 3)Second highest bidder must pay the amount he o

7、r she bid 4)How much would you bid for a dollar?,Lecture 13,Slide 10,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?,Lecture 13,Slide 11,Acquiring a Company,Scenario The value of T depends on the outcome of a curr

8、ent oil exploration project. Failure: Ts value = $0 Success: Ts value = $100/share All outcomes are equally likely,Lecture 13,Slide 12,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

9、to accept or reject until after the outcome is known only to T. How much should A offer?,Lecture 13,Slide 13,Key Ideas,Know your strategic situation, what is the game you are playing? Do not impose your own wishes and fancies on a game. that has been given to you . Your competitor is just as smart a

10、s you are! Has same information,rationality, and intelligence. you cannot “outguess” your opponent. Think about the response of others to your actions,Lecture 13,Slide 14,Game theory,Game theory is the study of strategic behavior in situation of conflict. In a oligopoly, a firms output choice depend

11、s on its prediction of its rivals output choices. These strategic choices are complex because other firms are also choosing output based on their predictions of their rivals outputs. To choose its best output, a firm must determine what the best choices of other firms will be, assuming rational beha

12、vior by all other firms and then do the best it can.,Lecture 13,Slide 15,Game Theory: Concept,A game is a general concept; it includes almost any situation in which each decision makers profits depends on actions of other decision makers. The decision makers are called the players. To describe a gam

13、e, we need to know the rules of the game, the possible strategies of each player, and the payoffs from each possible combination of actions. Players are assumed to want to maximize their payoffs. The rules include the order of moves by the players and whether binding agreements about actions are pos

14、sible. If no binding agreements are allowed, then the game is non-cooperative. The Cournot model is example of a non-cooperative game. Each firm independently makes its output choice with no possibility of entering into binding commitments with other firms. In fact, most games studied in economics a

15、re non-cooperative games. By contrast, in a cooperative game, firms can make binding commitments that allow them to plan joint strategies. Contract negotiations are an important example of cooperative games.,Lecture 13,Slide 16,Three Factors,1. Players 2. Strategies 3. Payoffs,Lecture 13,Slide 17,Ty

16、pes of the game,With a duopoly example Cooperative Vs. Non-cooperative Simultaneous Vs. sequential choice One-time Vs. repeated games,Lecture 13,Slide 18,Prisoners Dilemma,Two prisoners have been accused of collaborating in a crime. They are in separate jail cells and cannot communicate with each ot

17、her. Each has been asked to confess to the crime. If both prisoners confess, each will receive a prison term of five years. If neither confesses, the prosecutions case will be difficult to make, so the prisoners can expect to plea bargain and receive a term of two years. On the other hand, if one pr

18、isoner confesses and other does not, the one who confesses will receive a term of only one year, while the other will go to prison for ten years. If you were one of these prisoners, what would you do - confess or not confess?,Prisoner B,Confess,Dont Confess,Confess,Dont Confess,Prisoner A,-5, -5,-1,

19、 -10,-10, -1,-2, -2,Lecture 13,Slide 19,Dominant Strategies,Dominant Strategy Im doing the best I can no matter what you do. Youre doing the best you can no matter what I do. An Example A depends on Bs actions B: Advertise Question What should A do? (Hint: consider Bs decision,Lecture 13,Slide 26,Th

20、e Nash Equilibrium,Nash Equilibrium “Im doing the best I can given what you are doing” “Youre doing the best you can given what I am doing.”,Lecture 13,Slide 27,Examples With A Nash Equilibrium Two cereal companies Market for one producer of crispy cereal Market for one producer of sweet cereal Each

21、 firm only has the resources to introduce one cereal Noncooperative,The Nash Equilibrium Revisited,Product Choice Problem,Lecture 13,Slide 28,Product Choice Problem,Firm 1,Crispy,Sweet,Crispy,Sweet,Firm 2,Lecture 13,Slide 29,Product Choice Problem,Question Is there a Nash equilibrium? If not, why? I

22、f so, how can it be reached,Lecture 13,Slide 30,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,Lecture 13,Slide 31,Beach Location Game,Where will

23、the competitors locate (i.e. where is the Nash equilibrium)?,Lecture 13,Slide 32,Beach Location Game,2)Examples of this decision problem include: Locating a gas station Presidential elections,Lecture 13,Slide 33,The Nash Equilibrium,Maximin Strategies Scenario Two firms compete selling file-encrypti

24、on software They both use the same encryption standard (files encrypted by one software can be read by the other - advantage to consumers),Lecture 13,Slide 34,The Nash Equilibrium,Maximin Strategies Scenario Firm 1 has a much larger market share than Firm 2 Both are considering investing in a new en

25、cryption standard,Lecture 13,Slide 35,Maximin Strategy,Firm 1,Dont invest,Invest,Firm 2,Dont invest,Invest,Lecture 13,Slide 36,Maximin Strategy,Observations Dominant strategy Firm 2: Invest Nash equilibrium Firm 1: invest Firm 2: Invest,Lecture 13,Slide 37,Maximin Strategy,Observations If Firm 2 doe

26、s not invest, Firm 1 incurs significant losses Firm 1 might play dont invest Minimize losses to 10 -maximin strategy,Lecture 13,Slide 38,If both are rational and informed Both firms invest Nash equilibrium,The Nash Equilibrium,Maximin Strategy,Lecture 13,Slide 39,Consider If Player 2 is not rational

27、 or completely informed Firm 1s maximin strategy is to not invest Firm 2s maximin strategy is to invest. If 1 knows 2 is using a maximin strategy, 1 would invest,The Nash Equilibrium,Maximin Strategy,Lecture 13,Slide 40,Prisoners Dilemma,Prisoner A,Confess,Dont Confess,Confess,Dont Confess,Prisoner

28、B,Lecture 13,Slide 41,Prisoners Dilemma,What is the: Dominant strategy Nash equilibrium Maximin solution,Lecture 13,Slide 42,Example,Two companies want to open business in a new area . They can choose Hotel or supermarket. Resulting profit are given by the payoff matrix What outcomes , if any , are

29、Nash equilibrium? If the manager of each firms conservative and each follows a maximin strategy, what be the outcome? What is the cooperative outcome? Which benefits most from the cooperative? How much need to offer the other to persuade it to collude?,-50, -80,900, 500,200,800,60, 80,Firm 2,Hotel,S

30、upermarket,Hotel,Supermarket,Firm 1,Lecture 13,Slide 43,Pure Strategy Player makes a specific choice Mixed Strategy Player makes a random choice among two or more possible actions based on a set of chosen probabilities,The Nash Equilibrium,Mixed Strategy,Lecture 13,Slide 44,Matching Pennies,Player A

31、,Heads,Tails,Heads,Tails,Player B,Lecture 13,Slide 45,Matching Pennies,Observations Pure strategy: No Nash equilibrium Mixed strategy: Random choice is a Nash equilibrium Would a firm set price based on random choice assumption?,Lecture 13,Slide 46,The Battle of the Sexes,Jim,Wrestling,Opera,Wrestli

32、ng,Opera,Joan,Lecture 13,Slide 47,The Battle of the Sexes,Pure Strategy Both watch wrestling Both watch opera Mixed Strategy Jim chooses wrestling Joan chooses wrestling,Lecture 13,Slide 48,Example,What is the Nash equilibrium of the right table? If there is no Nash equilibrium involving pure strate

33、gies, check that players are indifferent among the actions used in their mixed strategies in equilibrium. Calculate the expected payoffs.,Lecture 13,Slide 49,博弈模型与竞争策略,警卫与窃贼的博弈 警卫睡觉,小偷去偷,小偷得益B,警卫被处分-D。 警卫不睡，小偷去偷，小偷被抓受惩处-P, 警卫不失不得。 警卫睡觉，小偷不偷，小偷不失不得，警卫得到休闲R. 警卫不睡，小偷不偷，都不得不失。,警卫,睡觉,不睡觉,偷,不偷,窃贼,B, -D,-P

34、, 0,0, R,0, 0,Lecture 13,Slide 50,博弈模型与竞争策略,混合博弈的两个原则 不能让对方知道或猜到自己的选择，因此必须在决策时采取随机决策； 二 选择每种策略的概率要恰好使对方无机可乘，对方无法通过有针对性的倾向于某种策略而得益,Lecture 13,Slide 51,博弈模型与竞争策略,警卫是不是睡觉决定于小偷偷不偷的概率，而小偷偷不偷的概率在于小偷猜警卫睡不睡觉 小偷一定来偷，警卫一定不睡觉； 小偷一定不来偷，警卫一定睡觉。 警卫的得益 与小偷偷不偷的概率有关,Lecture 13,Slide 52,博弈模型与竞争策略,若小偷来偷的概率为 偷 警卫的得益为：

35、R ( 1- 偷) + (-D) 偷小偷认为警卫不会愿意得益为负，最多为零。即R/D= 偷/ ( 1- 偷) 小偷偷不偷的概率等于R与D的比率,0,1,小偷偷 的概率,警卫睡觉的期望得益,R,D,P偷,Lecture 13,Slide 53,博弈模型与竞争策略,同样的道理警卫偷懒的概率 （睡觉） 睡 决定了小偷的得益为：(-P) ( 1- 睡) + (B) 睡警卫也认为小偷不会愿意得益为负，最多为零。即B / P = ( 1- 睡)/ 睡 警卫偷不偷懒的概率取决于 B与P的比率有趣的激励悖论 管理经济学考什么？,0,1,警卫偷懒 的概率,小偷的期望得益,P睡,P,B,Lecture 13,Sl

36、ide 54,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.,Lecture 13,Slide 55,Pricing Problem,Firm 1,Low Price,High Price,Low Price,High Price,Firm 2,L

37、ecture 13,Slide 56,Pricing Problem,Non-repeated game Strategy is Low1, Low2 Repeated game Tit-for-tat strategy is the most profitable,Lecture 13,Slide 57,Repeated Games,Conclusion: With repeated game The Prisoners Dilemma can have a cooperative outcome with tit-for-tat strategy,Lecture 13,Slide 58,R

38、epeated Games,Conclusion: This is most likely to occur in a market with: Few firms Stable demand Stable cost,Lecture 13,Slide 59,Repeated Games,Conclusion Cooperation is difficult at best since these factors may change in the long-run.,Lecture 13,Slide 60,Oligopolistic Cooperationin the Water Meter

39、Industry,Characteristics of the Market Four Producers Rockwell International (35%), Badger Meter, Neptune Water Meter Company, and Hersey Products (Badger, Neptune, and Hersey combined have about a 50 to 55% share),Lecture 13,Slide 61,Oligopolistic Cooperationin the Water Meter Industry,Characteristics of the Market Very inelastic demand Not a significant part of the budget,Lecture 13,Slide 62,Characteristics of the Market Stable demand Long standing relatio