Initial Post: Game Theory

RESPOND TO BOTH POST. 135 PER POST

POST 1

Take a look at the following video that tries to illustrate oligopoly and game theory through a Batman movie

Find one other YouTube video on game theory and share the link with your classmates. Then discuss the following issues:

o Did the Batman video or the other video you found help explain the concept of game theory? Or was it just silly?

o 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.

o What do you find easier to follow – the game theory matrices or the math equations/computations that you’ve used in this class?

POST 2

You may have heard a salesperson tell you, “This product pays for itself!” While this is probably rare for most products, sometimes there are future savings from certain products that will offset some of the costs. For example, if you buy a newer, more reliable, and more fuel-efficient car, it may save you on repair bills and gas prices compared with your old car. If you are a coffee connoisseur, buying a $100 espresso machine might save you money compared with constantly buying $4 drinks at your local Starbucks.

Think of a purchase you are planning to make or have recently made. How much did it cost? How much per year do you think you will save from this purchase, and for how many years will you get these savings? Estimate the present value of the savings, and subtract the cost of the product. Note that it is rare that any purchase will “pay for itself” (e.g., have a positive NPV). But are the savings enough that the product becomes a lot “cheaper” and more worthwhile for you to buy?