The text was initially published by W. The book discusses issues of strategic behaviour, decision making, and game theory. The authors present the main concepts, such as backward induction , auction theory , Nash equilibrium , noncooperative bargaining, to a general audience. Each concept is illustrated by examples from common life, business, sports, politics, etc.
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This banner text can have markup. Search the history of over billion web pages on the Internet. They make strategic tools humorous, human, and effective. Dixit and Nalebuff provide the skeleton key. He has taught courses on games of strategy and has done research into strategic behavior in international trade policy.
He earned his Ph. He teaches courses on strategy, politics, and decision-making. A frequent contributor on questions of strategy, his work has appeared in the New York Times and the Washington Post, among other widely read publications. A Rhodes Scholar, he earned his doctorate at Oxford University.
Dixit and Barry J. Nalebuff W. Nalebuff All rights reserved. Illustration credit: Chapter 2: Cartoon by Charles Schulz. Reprinted with permission of United Feature Syndicate, Inc. Game Theory 2. Management 3. Competition I. Nalebuff, Barry, D59 All of us must practice strategic thinking at work as well as at home. Businessmen and corporations must use good competitive strategies to survive. Politicians have to devise campaign strategies to get elected, and legislative strategies to implement their visions.
Football coaches plan strategies for the players to execute on the field. Parents trying to elicit good behavior from children must become amateur strategists the children are the pros. Good strategic thinking in such numerous diverse contexts remains an art. But its foundations consist of some simple basic principles—an emerging science of strategy. Our premise in writing this book is that readers from a variety of backgrounds and occupations can become better strategists if they know these principles.
The science of strategic thinking is called game theory. This is a relatively young science—less than fifty years old. It has already provided many useful insights for practical strategists. But, like all sciences, it has become shrouded in jargon and mathematics. These are essential research tools, but they prevent all but the specialists from understanding the basic ideas. We have attempted a translation of many important insights for the intelligent general reader.
We have replaced theoretical arguments with illustrative examples and case studies. We have removed all the mathematics and most of the jargon. The book should be accessible to all readers who are willing to follow a little bit of arithmetic, charts, and tables.
Many books have already attempted to develop ideas of strategic thinking for particular applications. In fact, Schelling pioneered a lot of game theory in the process of applying it to nuclear conflict. Steven Brams has written several books, the most notable being Game Theory and Politics. In this book we do not confine the ideas to any particular context. Instead, we offer a very wide range of illustrations for each basic principle.
Thus readers from many different backgrounds will all find something familiar here. They will also see how the same principles bear on strategies in less familiar circumstances; we hope this gives them a new perspective on many events in news as well as history. We also draw on the shared experience of most American readers, with illustrations from, for example, literature, movies, and sports. Serious scientists may think this trivializes strategy, but we believe that familiar examples from movies and sports are a very effective vehicle for conveying the important ideas.
We thank many students from these courses for their enthusiasm and ideas. Takashi Kanno and Yuichi Shimazu undertook the task of translating our words and ideas into Japanese; in the process, they improved the English version.
The idea of writing a book at a more popular level than that of a course text came from Hal Varian of the University of Michigan.
He also gave us many useful ideas and comments on earlier drafts. Drake McFeely at W. Norton was an excellent if exacting editor. He made extraordinary efforts to fashion our academic writing into a lively text.
If the book still retains some traces of its teaching origins, that is because we did not listen to all of his advice.
Many colleagues and friends read earlier drafts with care and gave us numerous detailed and excellent suggestions for improvement. We also want to give credit to those who have helped us find a title for this book. Hal Varian started us off with Thinking Strategically. Yale SOM students gave us many more choices. How should people behave in society? Our answer does not deal with ethics or etiquette. Nor do we aim to compete with philosophers, preachers, or even Emily Post. Our theme, although less lofty, affects the lives of all of us just as much as do morality and manners.
This book is about strategic behavior. All of us are strategists, whether we like it or not. It is better to be a good strategist than a bad one, and this book aims to help you improve your skills at discovering and using effective strategies. Work, even social life, is a constant stream of decisions.
What career to follow, how to manage a business, whom to marry, how to bring up children, whether to run for president, are just some examples of such fateful choices. The common element in these situations is that you do not act in a vacuum. Instead, you are surrounded by active decision-makers whose choices interact with yours.
This interaction has an important effect on your thinking and actions. To illustrate the point, think of the difference between the decisions of a lumberjack and those of a general. When the lumberjack decides how to chop wood, he does not expect the wood to fight back; his environment is neutral. Like the general, you must recognize that your business rivals, prospective spouse, and even your child are intelligent and purposive people. Their aims often conflict with yours, but they include some potential allies.
Your own choice must allow for the conflict, and utilize the cooperation. Such interactive decisions are called strategic, and the plan of action appropriate to them is called a strategy. This book aims to help you think strategically, and then translate these thoughts into action.
The branch of social science that studies strategic decision-making is called game theory. The games in this theory range from chess to child-rearing, from tennis to takeovers, and from advertising to arms control.
Playing these games requires many different kinds of skills. Basic skills, such as shooting ability in basketball, knowledge of precedents in law, or a blank face in poker, are one kind; strategic thinking is another.
Strategic thinking starts with your basic skills, and considers how best to use them. Knowing the law, you must decide the strategy for defending your client. Knowing how well your football team can pass or run, and how well the other team can defend against each choice, your decision as the coach is whether to pass or to run. Sometimes, as in the case of superpowers contemplating an adventure that risks nuclear war, strategic thinking also means knowing when not to play.
Our aim is to improve your strategy I. But we have not tried to provide a book of recipes for strategies. We develop the ideas and principles of strategic thinking; to apply them to a specific situation you face and to find the right choice there, you will have to do some more work. This is because the specifics of each situation are likely to differ in some significant aspects, and any general prescriptions for action we might give could be misleading.
In each situation, you will have to pull together principles of good strategy we have discussed, and also other principles from other considerations. You must combine them and, where they conflict with each other, evaluate the relative strengths of the different arguments. We do not promise to solve every question you might have. The science of game theory is far from being complete, and in some ways strategic thinking remains an art. We do provide guidance for translating the ideas into action.
Chapter 1 offers several examples showing how strategic issues arise in a variety of decisions. We point out some effective strategies, some less effective ones, and even some downright bad ones. The subsequent chapters proceed to build these examples into a system or a framework of thought. In the later chapters, we take up several broad classes of strategic situations—brinkmanship, voting, incentives, and bargaining—where you can see the principles in action.
The examples range from the familiar, trivial, or amusing— usually drawn from literature, sports, or movies—to the frightening —nuclear confrontation. The former are merely a nice and palatable vehicle for the game-theoretic ideas.
Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life
Would you like to tell us about a lower price? If you are a seller for this product, would you like to suggest updates through seller support? A major bestseller in Japan, Financial Times Top Ten book of the year, Book-of-the-Month Club bestseller, and required reading at the best business schools, Thinking Strategically is a crash course in outmaneuvering any rival. This entertaining guide builds on scores of case studies taken from business, sports, the movies, politics, and gambling.
Thinking Strategically : The Competitive Edge in Business, Politics, and Everyday Life
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