13 Strategies over Time

In solving a problem of this sort, the grand thing is to be able to reason backward.

—Sherlock Holmes (Sir Arthur Conan Doyle)

Learning Objectives

  1. Analyze the strategies of firms in repeated games.

  2. Determine the strategies of firms and the outcome in games in which one player acts first.

  3. Use dynamic games to show how the action of an incumbent firm may deter entry by a rival.

  4. Show how an incumbent firm can gain by taking actions that give it a cost advantage over its rivals.

  5. Discuss why moving first in a sequential game may be disadvantageous.

  6. Analyze how a manager may take advantage of a rival’s psychological biases in a dynamic game.

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