Game Theory 7
for this essay are lectures 22,23, and 24. Answer the following questions thoroughly. Refer to the lectures and the texts as needed. 1. Research the baseball players’ strike of 1980, and 1981 which took place in two parts: spring training and later in the season. Analyze this choice by the players in terms of BATNAs. You should know that players are paid uniformly throughout the season when they are not on strike but not during spring training. Also, game attendance is highest late in the season. 2. Create the Value Net for your own business or a business with which you are familiar. Take special care in thinking about complementors; they are often overlooked. 3. A rule in a contract, generally one with a commodity supplier, is the take-or-pay provision. It is usually used with commodity suppliers that have high fixed costs. As an example, you agree to buy 100 units from a supplier at $80 per unit. If you buy less, you still have to pay $60 for each unit not bought. How does this provision, which essentially turns $60 of variable costs into a fixed cost for you, discourage a supplier’s competition from stealing business?
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Question One
The strike by base ball players in 1981 was among the most impactful strikes in the sporting arena. The impact was so huge that there were numerous cancellations of some of the main games that had been scheduled. The contention which led to the strike was for control of players by the club owners. The owners wanted to have the power and authority over the players, a move that was heavily opposed by the players. Although the owners were promising some compensation as a result, the players still refused arguing that they needed to safeguard their freedom.
It was expected through the Best Alternative to Negotiated Agreement (BATNA), that the two parties would reach a compromise. BATNA is meant to place both parties at a level field where none of the party is subjected to conditions that are not favorable to them. Each party must reach a compromise and get to a level where both are comfortable. While at the negotiating table, the players felt that the terms that were offered to them would leave them at a disadvantage. The owners of the baseball clubs were offering compensation in place of having the autonomy of players taken from them. The fact that the players would have their freedom taken even with compensation was seen to be unfair. BATNA ensures that each party is comfortable with the final decision made. This explains the decision made by the players to strike as a way of protesting the decision of the team owners (Porter, 2013).
Complementors
These are products which go together with a particular product. There are products which cannot be used solely. For example, bread must be buttered. As such; butter is a complementary product to bread. More often, complementary products are ignored, yet they play a determinant role as to whether or not a product will do well in the market. When complementary products are not available in the market, people are likely to switch to other products that are ready to use. For example, if butter which is a complementary product to bread is not available, people are likely to switch from having bread altogether. Instead, they may opt for other products such as cakes or other pastries that do...