Game Theory and Business Applications

1. Front Matter

   Pages i-x

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2. Introduction

   • Kalyan Chatterjee, William Samuelson

   Pages 1-16

3. Game Theory Models in Finance

   • Franklin Allen, Stephen Morris

   Pages 17-48

4. Game Theory Models in Accounting

   • Chandra Kanodia

   Pages 49-94

5. Game Theory Models in Operations Management and Information Systems

   • Lode Li, Seungjin Whang

   Pages 95-131

6. Incentive Contracting and the Franchise Decision

   • Francine Lafontaine, Margaret E. Slade

   Pages 133-188

7. Cooperative Games and Business Strategy

   • H. W. Stuart Jr.

   Pages 189-211

8. Renegotiation in the Repeated Amnesty Dilemma, with Economic Applications

   • Joseph Farrell, Georg Weizsäcker

   Pages 213-246

9. Reputation and Signalling Quality through Price Choice

   • Taradas Bandyopadhyay, Kalyan Chatterjee, Navendu Vasavada

   Pages 247-272

10. Game Theory and the Practice of Bargaining

    • Kalyan Chatterjee

    Pages 273-294

11. Auctions in Theory and Practice

    • William Samuelson

    Pages 295-338

12. The Economics of Auctions and Bidder Collusion

    • Robert C. Marshall, Michael J. Meurer

    Pages 339-370

13. Activity Rules for an Iterated Double Auction

    • Robert Wilson

    Pages 371-386

14. Back Matter

    Pages 387-387

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In the last twenty-five years, game theory has been applied to a growing number of practical problems: from antitrust analysis to monetary policy; from the design of auction institutions to the structuring of incentives within firms; from patent races to dispute resolution. The purpose of Game Theory and Business Applications is to expand these applications of game theory into a broad and meaningful view of the way business decisions can be modelled and analyzed. The chapter contents embrace a wide variety of business functions - from accounting to finance, to operations, to strategy, and to organizational design. In addition, specific application areas include numerous kinds of market competition, bargaining, auctions and competitive bidding. All of these applications involve competitive decision settings, specifically situations where a number of economic agents in pursuit of their respective self-interests take actions that together affect all of their fortunes. In the language of game theory, players take actions consistent with the given `rules of the game,' and these joint actions determine final outcomes and payoffs. As this volume demonstrates, game theory provides a compelling guide for business strategy.
The first section of this volume discusses game-theoretic applications in four functional areas of business: finance, accounting, operations management and information systems, and organization design. The second section considers competitive strategies in `imperfect' markets. Using cooperative and non-cooperative game-theoretic approaches, these four chapters consider various topics: spatial competition, signaling of product quality, trust and cooperation in ongoing relationships, strategic behavior in bargaining, and the `balance of power' between the firm and its buyers and suppliers. The last section of the book deals in detail with auctions and competitive bidding institutions. The emphasis is on the contributions of game theory to both auction theory and practice. Topics considered include optimal auctions, bidder collusion, and the design of institutions for selling the radio spectrum and trading electrical power.

• Patent
• business
• business strategy
• cooperation
• finance
• game theory
• information system
• management
• operations management
• organization
• strategy

`...the book is recommended as a valuable stock-taking enterprise'
Operations Research Spektrum

• Pennsylvania State University, USA

  Kalyan Chatterjee

• Boston University, USA

  William F. Samuelson