Game Theory: How to Make It Pay Harvard Case Solution & Analysis

Game Theory: How to Make It Pay Case Study Help

Introduction

The case of Boeing and Walmart revolves around the decisions taken for prices and entering into a new market. This situation is discussed and analyzed under the (Game Theory) which is a division of arithmetic that help to identify the way people make their decisions under tactical conditions, and the results of their actions depend on the rival actions. It has numerous applications in fields such as economics, political science, psychology, and biology. To make game theory pay, it is important to understand the key concepts and strategies involved.

One important concept in this theory is the notion of a "Nash equilibrium." This condition presents that each company or individual tries to propose a strategy that considers the finest reaction to the rival strategy, and neither performer has the encouragement to change their strategy. In other words, a “Nash Equilibrium” characterizes an unchanging outcome of the overall process, in this situation no performer be able to recover their payoff by altering their approach.

Situational Analysis

There is a need to analyze the various strategies that involve in the game theory, which ultimately helps the player to understand the situation of the game and the coming strategy that can be used by the other player or competitor. The strategies involved in game theory are the dominant strategy for advertising, dominated strategy for not advertising, mastering strategy deals with price competition, and possible outcomes strategy.

Dominant Strategy

In game theory, this strategy considers the best strategy that helps the one performer to make the best decisions as compared to the rival decisions. A dominant strategy would be the advertising approach that provides the finest outcome for a company as compared to its rival strategies.

However, identifying a dominant strategy for advertising can be challenging because the outcome of an advertising strategy depends on many factors such as market conditions, customer behavior, and competitor actions. Moreover, the effectiveness of an advertising strategy may not be immediate and may require a long-term perspective.

In practice, companies often use a combination of advertising strategies that take into account the behavior of their competitors, the characteristics of their customers, and their overall marketing goals. Some commonly used advertising strategies are brand building, targeted, and competitive advertising. Ultimately, the selection of an advertising approach is contingent on the precise goals and circumstances of the organization, and there may not be a single dominant strategy that works in all situations.

Dominated Strategy

In game theory, a dominated strategy is a strategy that a player would never choose to play, regardless of what the other players do. Not advertising can be a dominated strategy if the other players (competitors) are advertising. This is because advertising typically increases brand awareness and draws customers to the advertiser's products, meaning that competitors who do not advertise will be at a disadvantage.

However, if both companies decide not to advertise, then not advertising may no longer be a dominated strategy, as neither company would have an advantage in terms of brand awareness. In this case, both companies may choose to compete on other factors, such as price or product quality, rather than advertising.

For example, consider a scenario where two companies, A and B, are competing in the same market. If company A advertises its products while company B does not, then company B's strategy of not advertising can be considered a dominated strategy. This is because, by not advertising, company B is likely to lose potential customers to company A, which could lead to a decrease in sales and profits for company B.

Mastering Strategy

Mastering strategy in game theory involves understanding the underlying principles of the game, identifying potential strategies, and selecting the best strategy based on the expected payoffs and possible outcomes of the game. The first step in the mastering strategy is to understand the game itself, including its rules, objectives, and players. This involves analyzing the available information about the game and identifying the key factors that will affect the players' decisions..................

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