Applied Game Theory and Strategic Behavior  book cover
1st Edition

Applied Game Theory and Strategic Behavior

ISBN 9781584888437
Published July 29, 2009 by Chapman and Hall/CRC
230 Pages 34 B/W Illustrations

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Book Description

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.

Table of Contents


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



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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.