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Category: Competition and game theory

  • The Impact Of Conformity And The Need For Uniqueness

    Analytical models are fascinating ways to look at what happens in markets. They can look a bit odd from the outside. These models tend to have a ton of strong assumptions which might lead to questions about their value. They can, however, help us think through some commonly observed phenomenon in markets. What then can…

  • Is Sustainable Competitive Advantage A Useful Goal

    I must confess to being a bit dubious about the idea of sustainable competitive advantage. It seems designed to allow people to pontificate with a pronouncement that sounds meaningful. Yet, speaking about sustainable competitive advantage often requires little actual evidence given the underlying idea is a bit vague. Sustainable Competitive Advantage A competitive advantage isn’t…

  • Price Wars

    The problem of price wars is a significant one for businesses. The Problem of Price Wars Consumers generally love price wars. It is possible for such conflicts to hurt consumers long-term but in the short-term lower prices share more of the value created by the business. This makes consumers happier. Managers can more easily see…

  • Learning From A Case Study Of Harvard Business School

    I see much value in opinionated books, they are great at starting conversations. Bearing that in mind I will say that I enjoyed Duff McDonald’s The Golden Passport. He describes the history of Harvard Business School (HBS) and he isn’t afraid to give his thoughts. What then can we learn from a case study of…

  • The Trump Fallacy

    Dixit and Nalebuff have great skill in popularizing game theory. Today I will detail a problem that I will call The Trump Fallacy. Theory And Understanding The World Their work is full of interesting examples and useful ways of looking at sometimes tricky concepts. They are strong believers in having theory to back up ideas…

  • Reference Group Neglect: Don’t Gamble With Gamblers

    The problem of why entrepreneurs start up companies is an interesting one. Many fail but it doesn’t seem to put new ones off. Colin Camerer and Dan Lovallo examined a possible reason for this. (They examine it in a lab so can’t give definitive answers but it is still interesting.) The authors use a small game…

  • The Red Queen And Implications For Best Practice

    It is hard to spend any time at a business school without hearing the phrase best practice. We teach students best practice. Junior professors seek hints from senior folk on best practice. Even schools regularly go through bouts of benchmarking to see if they are adopting best practice. Best practice essentially is something that gets the most…

  • The Aura Of Inevitability

    Many markets have characteristics different to those of the “standard” products. By which I mean the apples and oranges one learns about in introductory economics. One of the more interesting facets of the information economy is that some markets can tip. This means success leads to future success. Winners get more. This can create the aura of inevitability.…

  • What Is First Mover Advantage?

    Information Rules by Carl Shapiro and Hal Varian is a classic business book. While today’s post will be a bit cranky it isn’t really about the book and I’ll be appropriately positive next week. The book descriptions of business scenarios are dated but the ideas are relatively timeless. Plus the dated examples make you feel young — battles…

  • Are Free Markets Discovered Or Created?

    A key social science question is: Are Free Markets Discovered Or Created? This has surprisingly large political consequences. For example, what is the role of government? How much does it create the conditions for prosperity, or should it just get out of the way? Market Design Market Design is the study of what makes for…

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