BUS 530 Module 3 MARKET STRUCTURE AND GAME THEORY MODULAR LEARNING OUTCOMES, statistics homework help

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MARKET STRUCTURE AND GAME THEORY

Modular Learning Outcomes

Upon successful completion of this module, the student will be able to satisfy the following outcomes:

  • Case---instructions attached
    • Analyze and test game theory strategies.
    • Understand and compute Herfindahl index scores.
    • Compare and contrast four alternative market structures and analyze the effects on strategic decision making.
  • SLP---instructions attached
    • Conduct industry-level competitive analysis using economic concepts of market structure.
  • Discussion---instructions below (1 page)
    • You may have noticed the discussion in Taylor (2014) at the end of Chapter 10 about oligopoly and the prisoner’s dilemma. The prisoner’s dilemma is an example of game theory. A “game” is like a board game, as your optimal move depends on what your opponent does. The same holds in oligopoly, as your own decisions as to what price to charge or how much to produce depend on what your competitors do.Take a look at the following video that tries to illustrate oligopoly and game theory through a Batman movie: https://www.youtube.com/watch?v=JMq059SAQXM
    • Find one other YouTube video on game theory and share the link with your classmates. Then discuss the following issues:
        • Did the Batman video or the other video you found help explain the concept of game theory? Or was it just silly?
        • Besides oligopoly, can you think of any other situations that game theory is useful for? This can be situations in the business world, in your own workplace, or even something you saw in a movie or TV show.
        • What do you find easier to follow – the game theory matrices or the math equations/computations that you’ve used in this class?
      Finally, watch some of the game theory videos that your classmates found and give your comments on these videos (I will send you what classmates have posted).
  • Unformatted Attachment Preview

    Module 3 - Case MARKET STRUCTURE AND GAME THEORY Assignment Overview As always, make sure to thoroughly review the required background materials before starting the assignments. The assignment questions will require you to do some calculations and also apply the concepts from the module. Question 3 differs from previous assignments in that you have to use an online simulation tool; but this activity should be a fun break from the standard numerical problems you have been doing. Case Assignment 1. 1. For this problem use the Herfindahl Index to compute market concentration: a. Suppose Apple has 45% of the U.S. market share for smartphones, followed by Samsung with 30%, LG with 9%, Motorola with 8%, HTC with 6%, and Nokia with 2%. What is the Herfindahl Index for the smartphone industry based on these numbers? Based on the Herfindahl Index, do you think the government would be willing to approve a merger between Apple and Samsung? b. Now suppose Nokia and Motorola come out with a new smartphone that takes away a huge chunk of market share from Apple and Samsung. The new market shares are 25% for Apple, 20% for Samsung, 20% for Motorola, 20% for Nokia, 10% for LG, and 5% for HTC. 2. Use what you learned about perfect competition, monopoly, and oligopoly to answer these questions: a. In the table below is the quantity produced, the price, the fixed costs, and variable costs for a perfectly competitive firm that faces a constant price of $150 for its product regardless of the quantity it sells. Use the information in the first four columns to calculate the number for the last four columns. At what quantity should they produce based on what you find with your results? b. How do you think your answer might change if it became a monopolist with all of its competitors leaving the market? Or if it became an oligopoly with only one or two competitors? Quantity Price Fixed Cost Variable Cost 0 150 200 - 1 150 200 $140 2 150 200 $240 3 150 200 $320 4 150 200 $410 5 150 200 $520 6 150 200 $650 7 150 200 $810 8 150 200 $1,010 9 150 200 $1,310 10 150 200 $1,710 Total Cost Marginal Cost Total Revenue - 3. 3. You’ve read about the prisoner’s dilemma in the background readings. Suppose you are a business owner with just one main competitor. If neither you nor your competitor cut your prices, you will both be more profitable. However, if your competitor lowers its prices and you keep your prices high, then you will lose all of your sales to your competitor. Every month you and your competitor place advertisements in the local newspaper with your price – so you need to decide each month whether or not to keep prices high, or lower them based on what you think your competitor might do. Go to the following webpage and test out some of your potential Profit/ Loss price strategies: http://www.gametheory.net/Mike/applets/PDilemma/Pdilemma.ht ml The strategy “defect” indicates lowering your prices. The strategy “cooperate” means keep prices the same. Try out different strategies, such as cooperating all the time or defecting sometimes. There are five different rounds of this game, each with a competitor with different personalities and different strategies. Play all five rounds and experiment with different strategic approaches. Report your scores for each round, and discuss which strategies seemed to work the best for you. Assignment Expectations • • • • Answer the assignment questions directly. Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials. For computational problems, make sure to show your work and explain your steps. For short answer/short essay questions make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal. Module 3 - SLP MARKET STRUCTURE AND GAME THEORY For this assignment, you will be building upon your Module 2 SLP by continuing to examine other businesses in your chosen industry. Remember that the other businesses you wrote about in your Module 2 SLP will be your future competitors if you decide to open your own business. So it is important to get an idea of the competitive landscape of your chosen business. After reviewing the required background readings and doing some more research on your chosen industry, write a three-page paper discussing the following issues: 1. What market structure is there for this line of business in your home town? Is this a monopoly, oligopoly, monopolistic competition, or perfect competition? Justify your answer using both your own research on this type of business in your home town, and by referencing some of the required background readings on different types of market structures. 2. Now that you have examined market structure of your chosen industry in your home town, do some research on IBIS World on market structure in this industry nationwide. You can access IBIS World by going to the main TLC Portal and clicking on “Additional Library Resources”. A link to IBIS World will come up. This direct link might also work if you are already logged onto the Trident online library. What information could you find regarding how concentrated or how competitive this industry is? 3. Based on the information you found for Question 2, what market structure do you think best describes this industry nationwide? Is this a monopoly, oligopoly, monopolistic competition, or perfect competition? Explain your answer using both information from IBIS World and the concepts from the required background readings. SLP Assignment Expectations • • • Answer the assignment questions directly. Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials. Make sure to use reliable and credible sources as your references. Articles published in established newspapers or business • journals/magazines are preferred. If you find articles on the Internet, make sure they are from a credible source. Reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11- 14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.
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    Attached.

    Running head: DISCUSSION: GAME THEORY

    1

    Trident University

    Student’s name

    Discussion: Game Theory

    Course number and name

    Professor’s name

    Date

    2
    DISCUSSION: GAME THEORY

    Introduction
    Game theory, a strategy analysis within competitive situations, is a branch of mathematics
    in which outcomes of a player’s action choice depends on the other players’ actions critically.
    Game theory can be applied to various situations including business and war. In this discussion
    focus in place on game theory in the context of oligopoly market structure and in the workplace.
    Two videos will be analyzed in relation to their effectiveness in explaining game theory.
    Discussion
    Both the Batman video (ACDCLeadership, 2014) and the video found (This Place, 2014),
    helped explain the concept of game theory. The Batman video explains how interdependent players
    in a market are faced with decisions of conflict and cooperation in order to protect themselves. For
    example, in the Batman video, DC comics and Marvel are faced with decisions that are influenced
    by the other’s decision on which type of movie to produce. The same case applies to the prisoner’s
    dilemma video, both cigarette companies are faced with decisions on whether to advertise or not.
    Both will choose the option that will bring them more gains no matter how it affects the other
    company.
    According to Hennet and Arda (2008), besides oligopoly, game theory can also be useful
    in is contract negotiations. These can be employee contracts, supplier contracts or whichever type
    of contract in which two people are both trying to gain the most out of it. In contract negotiations,
    stances taken by one party can be influenced by the stance taken by the other party, each trying to
    protect their interests. I find that the game theory matrices are much easier to follow than the math
    equations/computations that have been used in class. They create a visual representation of the
    game theory that is easier to grasp and use for practice.

    3
    DISCUSSION: GAME THEORY

    References
    [ACDCLeadership]. (2014 Apr 27). Oligopolies and Game Theory- EconMovies #8: The Dark
    Knight. [Video File]. Retrieved from
    https://www.youtube.com/watch?v=JMq059SAQXM
    [This Place]. (2014 October 4). The Prisoner's Dilemma. [Video File]. Retrieved from
    https://www.youtube.com/watch?v=t9Lo2fgxWHw
    Hennet, J. C., & Arda, Y. (2008). Supply chain coordination: A game-theory approach.
    Engineering Applications of Artificial Intelligence, 21(3), 399-405.


    Running head: DISCUSSION: GAME THEORY

    1

    Trident University

    Student’s name

    Discussion: Game Theory

    Course number and name

    Professor’s name

    Date

    2
    DISCUSSION: GAME THEORY

    Introduction
    Game theory, a strategy analysis within competitive situations, is a branch of mathematics
    in which outcomes of a player’s action choice depends on the other players’ actions critically.
    Game theory can be applied to various situations including business and war. In this discussion
    focus in place on game theory in the context of oligopoly market structure and in the workplace.
    Two videos will be analyzed in relation to their effectiveness in explaining game theory.
    Discussion
    Both the Batman video (ACDCLeadership, 2014) and the video found (This Place, 2014),
    helped explain the concept of game theory....


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