1st Edition

Applied Game Theory and Strategic Behavior

    230 Pages 34 B/W Illustrations
    by Chapman & Hall

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    Useful Tools to Help Solve Decision Making Problems

    Applied Game Theory and Strategic Behavior demonstrates the use of various game theory techniques to address practical business, economic, legal, and public policy issues. It also illustrates the benefits of employing strategic thinking that incorporates the uncertainty surrounding the behavior of other parties.

    Real-world applications of game theory
    Exploring a variety of games, the book outlines the process of modeling game theory questions while thinking strategically. It introduces core concepts through simple examples and case studies taken from the authors’ consulting work in the automotive, beer, wine, and spirits industries as well as in debates over government regulation. The authors include newly developed software applications that can construct and solve game theory models and present strategic options in clear, visual diagrams.

    Out of the box and into the business world
    Striking the right balance between necessary mathematics and practical applications, this book shows how game theory can be used in real life, not just in mathematical models. It helps readers improve their strategic thinking, define games based on actual situations, model games with payoffs and probabilities, and make strategically sound decisions.


    A Brief History of Game Theory

    Why Study Games?

    Rapid Discoveries in the Twentieth Century


    Introduction to Game Theory Concepts and Strategy

    Game Theory, Strategic Behavior, and Strategy

    Consumer Behavior, Utility Theory, and Game Theory

    Game-Theoretic Models and Illustration

    Rules of the Game

    Strategy and Equilibrium

    Complex Games and Games by Categories

    Other Key Game Theory Concepts

    Modeling Games with MATLAB and Experimenting Games

    Prisoner’s Dilemma

    Battle of the Sexes

    A Sample Game of Dominated Strategies with MATLAB

    Theory of Strategic Value

    Introduction: The Game of Business

    Strategy and Value

    States of Nature

    State Variables for Business: Control Variables

    The Event Tree and Dynamic Payoffs

    The Firm

    Real Options and Management Flexibility

    What Is "Value" for a Firm?

    A Dynamic Game of Asymmetric Information in the Beer Industry

    A Game between a Global Brewer and a Growing National Beer Importer

    Regulated Alcoholic Beverages Industry and Three-Tier System in the United States

    Sales Performance of Gambrinus: General Import Market

    Incentives at the Time of the 1996 Decision

    Strategic Options Available in 1996 and the Game

    Game-Theoretic Model

    Consolidation in the Wine and Spirits Industry

    Economic Structure of the Industry

    The Wine and Spirits Industry and Consolidation

    A Hypothetical Consolidation

    Description of the Game

    A Regulatory Game: CAFE Standards and Competing Automakers


    History of Corporate Average Fuel Efficiency (CAFE)

    Current Debates

    Statement of the Problem and the Strategic and Game Theoretical Motivation behind CAFE

    Building the Game and Players, Strategies, Payoffs, and Solution

    On Auto Industry Crisis of 2008 and Analysis of a Potential Merger: Strategic Approach

    Introduction and Cause of the 2008 Auto Industry Crisis

    Likely Scenarios for the Automotive Industry

    Economic and Industry Conditions

    Key Events to Date

    Discussion of Potential Scenarios

    Strategic Approach to a Potential Merger: Strategies of Key Players

    Game Theory and Law


    Game Theory Examples in Law

    Antitrust Case Study: United States of America, et al., v. Microsoft Corporation

    Game-Theoretic Model in Microsoft Antitrust Case and Players

    The Trial and Conclusions of Law




    A senior consultant at Anderson Economic Group, Ilhan Kubilay Geçkil specializes in corporate finance, economics, business valuation, risk analysis, M&A, and strategic consulting. He provides economic forecasts for Bloomberg’s monthly economic survey. One of his recently published papers was honored as the Edmund A. Mennis Contributed Paper Award of the National Association for Business Economics. Mr. Geçkil holds a Master’s in Economics from the Eli Broad Graduate School of Management at Michigan State University and a Bachelor’s in Economics from Koç University in Istanbul, Turkey.

    Patrick L. Anderson is the founder and CEO of Anderson Economic Group. Prior to starting his company, Mr. Anderson served as the Chief of Staff for the Michigan Department of State and Deputy Budget Director under former Governor John Engler. A recognized authority on business valuation and commercial damages, Mr. Anderson has provided expert testimony, management, and strategic consulting. He is the executive editor of three edition of the State Economic Handbook and has written more than 100 published works, including the book Business Economics and Finance and a chapter in Litigation Economics. Mr. Anderson is a graduate of the University of Michigan, where he earned a Master’s of Public Policy and a B.A. in political science.