Game theory application for lowest price guarantee Essay

The game theory is applicable to a host of issues especially in economics. The theory is applicable where there is a multiplicity of decision makers and each player’s action affects or is affected by what the other party does. To cite a specific example, it is worthy examining how firms make production decisions relating to quality, quantity, pricing, etc. the game theory is equally useful in auctions, contract negotiations, and in voting exercises. Literature review Price setting is a difficult task as there is a multiplicity of players in each business or industry. This is furthered by the fact that each player intends to make the best out of every situation. However, decisions are always taken while accounting for what the rest of the players are going to do. This case holds true especially when the industry being studied is a free market where there is free entry and exit. The fact that competition calls for the adoption of the best possible alternative dictates that a god approach is employed in decision making regarding pricing (Axelrod, 43). Maintenance of a brand is important in the pricing game. A business which has a dominant brand has little work to do since sellers want to stock the products and customer loyalty remains high (Axelrod, 45). At times, changes may prove worthy undertaking. For example when a company is operating excess productivity, it may be forced to lower prices to increase its sales. However, this is only commendable if it does not spark a price war. The chances of achieving minimal interference in the market are desirable though difficult to achieve. This is held because lowering prices of a player’s products will lead to an increased demand for the party’s products assuming that the quality produced is similar to other players’ products (Kalai and Stanford, 400). Even if such products may be of lower quality, it is held that the demand for these products will rise. A rise in a player’s products will definitely lower the demand for other players’ goods in the industry (Kalai and Stanford, 400). This is bound to lead to a price war as the other players must take similar action if they are to remain in business. In the same line of thinking, measures to increase the prices of certain commodities may be counter productive. This means that an attempt to hike the price may lead to resistance from the part of the customers. Such resistance is reflected by the unwillingness to make purchases after a rise in price. An indication of reduced sales also point to an attempt to raise the prices. This indicates that players in any industry or business will always be forced to adopt the lowest possible price. It is only at the lowest prices where firms sell an equilibrium quantity while providing room for profit making. However, lowering of prices below the normal price may send a wrong signal to the customers who may mistake that act as a deceiving ploy to offer them products of a lesser value or quality and thus scare them away (Kalai and Stanford, 402). Such acts not only lead to brand failure as they also hold the potential of reducing revenue to a business entity. A reversal of the price to reflect the actual market pricing may fail to bring back the deserting customers. This may call for re launching of the brand, an expensive issue to any business. However, a gamble of this nature may win customers albeit in the short run. On the other hand, if the businesses in the industry respond by lowering prices, the leading party in lowering prices may have failed as the market share will most likely revert to the normal point. But such lower prices can only be sustainable if they allow a business to enjoy certain profit levels (Chamberlin, 45). Sustainable margins are created through three major ways. The first one centers on product differentiation, the second, on economies of scale, and the third, on the barriers to entry (Hotelling, 41-43). Game theory is useful in pricing strategies especially in oligopolistic industries. In an oligopoly, firms may make decisions regarding whether to increase, to reduce prices or to keep them unchanged (Hotelling, 47-51). The nature of the demand curve in oligopoly is kinked (Kalai and Stanford, 397). This suggests a presence of price stability in the industry. This is possible because in an event of firms increasing prices while others do not change, the end result is a significant fall in demand. On the other hand, if firms reduce the prices, they will gain a market share, the other firms in the industry do not want such a scenario as they also follow suit and consequently prices drop across the industry (Kalai and Stanford, 398). Such a decline in price would see all firms in the industry lose significantly due to poor pricing. In this market a decision by one firm holds a significant bearing in the industry. However, in real world, the kinked curve may never be attained (Kalai and Stanford, 410). This is attributable to the game theory and the complexities involved. To begin with, firms may collude and set prices and production quotas which they stick to. Though this is illegal in some countries like the UK, imposing it is very difficult. Firms may not always pursue profit maximization as they may be willing to make lesser profits if this can raise their market share. Wal Mart supermarket is one such example utilizing this strategy in a bid to expand its activities (Kalai and Stanford, 409). Firms could not be aware of the reactions f other players or may simply choose to ignore the reactions of other players in the industry. To cite an example, a small firm in an oligopoly may avoid cutting prices if it perceives that its action may fail to occasion a significant impact on an industry (Robinson, 22-25). In a monopolistic type of market, the presence of only one buyer implies that price setting is exclusively held by one firm which also happens to act as the industry (Sraffa, 534). This firm can change prices but it must do that carefully (Sraffa, 546). This is held because in as much as the firm can price its products highly, it holds the potential of failing to sell if it goes beyond a certain level of pricing unless it deals in basic goods. So the game theory applies in this case by dictating to the firm to set its price at the point where it maximizes sales and profits. In a duopoly, the presence of two companies or firms is likely to lead to bidding wars and subsequently benefit the customer as a move by one player is easily countered by the other player (Sraffa, 500). This is however based on an assumption that both players are in a position to produce same or slightly identical products. So in a duopoly, prices charged are lowered if the two engage in a game of trying to outdo the other. Findings and conclusion This paper presents pricing as a game in which businesses engage in. it is discernable that every business entity seeks to achieve profits and sustain its growth. This depends on such business’s ability to sell its products. Apart from monopolistic markets the rest have a multiplicity of players. This implies that price setting is a function of other firms’ behavior on the same products. In a competitive environment as realized above, if one player changes the price, other players will counter that move by carrying out a similar adjustment. This may in the end lead to a loss for all players. On the basis of the above realization, industry players are forced to operate on the Nash equilibrium. At this position, each player in an industry is well of playing by the rules of the game. This means the pricing at this point is the lowest the firms can charge, any reduction on the price would seriously affect the profitability of the company. if a player chose to reduce prices in the hope of making profits as a result of increased sales, the other players will follow sit and the end result is a loss for all. In reference to a monopolistic market, the cost of products is the lowest possible as further increments on the price would portend ill for the business’ profits due to reduced sales. On the basis of the evidence adduced in this paper, the game theory holds a huge influence on pricing of products in all markets. The aim of the firms remains the pursuit of pricing their products at a point where they can sustain the businesses. However, the game theory may not lead to the lowest prices if firms collude and if other firms use underhand tactics like issuing threats to other players. Cited Works E. H. Chamberlin. The Theory of Monopolistic Competition. Cambridge: MA Harvard University Press, 2003. Ehud. Kalai and William, Stanford. â€Å"Finite Rationality and Interpersonal Complexity in Repeated Games,† Econometrica 56(2008), 397-410. Harrison, Hotelling. â€Å"Stability in Competition,† Economic Journal, 39 (Mar. 1929):41- 57. John, Robinson. The Economics of Imperfect Competition. London: Macmillan, 2003. Paul, Sraffa, â€Å"The Laws of returns under competitive conditions,† Economic Journal 36(2006), 535-550. Robert, Axelrod. The Evolution of Cooperation. NY: Basic Books, 2004.

Antigone

Evil not only fascinates people in general, but writers as well. In what ways and with what effect has â€Å"evil† been treated in Antigone? In the play of ‘Antigone’, evil appears in many forms. There is the soldier who is a traitor to his nation; the sister trying to prove her love for her family yet ends up breaking the law; the king who so eagerly tries to stop rule-breakers yet he himself neglects his flesh and blood. Here the difference of the two works is seen: The Earth of Mankind gives the impression that characters of power possess evil, whereas in Antigone, evil can be inside all of these opposing individuals. Polyneices, a soldier who fought against his own nation was to be punished as a traitor by not burying him after his death. When his sister, Antigone, goes against the King’s decree and burry Polyneices, she was also seen as a traitor to her country. However their other sibling, Ismene, who sits at home as Antigone fights for her brother’s right, is also said to have performed a crime of being a traitor to her family. Now something we can see from here is that each and every character involved in the story so far possesses evil. This message is summed up by Sophocles in page 204 of the book, in Ode 1, where it says, ‘O fate of man, working both good and evil! ’ What the writer is trying to convey here is more realistic than what is said in ‘The Earth of Mankind’; both evil and good is naturally inside everyone’s mind.It is one’s choice to do which, but performing a crime is inevitable. Everyone has his or her own ‘evil’ deeds, not only the powerful ones. As seen in my previous explanation on who performs evil deeds in the play of ‘Antigone’, we can see that one evil act leads to another, whereas the chain of good doings ends sooner. Eteocles, who was a soldier and a brother to Antigone, fought bravely for his nation and was buried with honor by the King. Although many respect him for his virtuosity, the play didn’t show that further kindness was done because of him.However, when Polyneices betrays his nation and fought against it, a number of people are forced to perform evil in his affect. Antigone had to break the law in order to give him his right of getting a burial. Ismene, who was too scared to go against the decree, was said to be a traitor to her family, as she didn’t come to assist Antigone in her mission. They then cause Creon to imprison the sisters, punish them, which then cause him to have a fight with his son. Creon then causes death of Haimon, and therefore leads to the suicide of the Queen.On page 243, the messenger says, ‘†¦and her last breath was a curse for their father, the murderer of her sons. ’ A number of misfortunes occur as being the result of one act of evil. The play now gives the effect that evil gives more negative outcomes in comparison to good giving positive results. Here, evil is powerful enough to make such a big impact on its surrounding; bigger than the good. Creon sees Antigone as a traitor to his rules, despite her reasons. Creon imprisoned both Antigone and Ismene for the burial of the nation’s traitor, Polyneices, who is their brother.It is true that Antigone has broken the law, but according to her logic, it is more important to follow the rules of the Gods than the King. She feels that the dead, no matter what they did in their lives, deserve respect and be buried, and that it was her duty to do so as Polyneices’ sister. She didn’t care that she is breaking the decree, and may be punished to die, as long as this task is done. Creon, being a non-believer of the Gods in the beginning, thinks that breaking the law is crime, no matter for what purpose.Polyneices was a traitor and he suffers because of himself, thus no one should help him. On page 211, Creon even said to Antigone, ‘An enemy is an enemy, even dead. ’ There is truth in both arguments, and no one can say what is right. Here, the play depicts that the existence of evil depends on how one views it. ‘Antigone’ treats evil as a subjective topic, where it may be seen as a crime from one point of view, but is actually a good deed from another. No evil deed is done without a reason, and the play shows that one should explore, not only what crime has been done, but also why it was done.

Crow Lake Essay Example | Topics and Well Written Essays - 500 words

Crow Lake - Essay Example This brings about another challenge, as they have to struggle in order to cater for the needs of the family. With the responsibility of taking care of the family, the two brothers and their eldest sister move to seek employment opportunities, which ideally is a tough task but since there is no alternative, they are forced to settle for any menial jobs available for them. For the two brothers, they take up jobs in the neighborhood at Pye’s family. With such background information, this paper analyses the case of Luke, the older of the two brothers currently in their late teens. Luke despite being the older son in the family, is not good academically, and with the realization of the responsibility ahead, forgoes his college education dreams to allow his brother Matt who despite being younger is better academically. Ideally, in an instance of not completing the book, it is evident that Luke would have become a greater individual in the society considering his hard work and the act of scarify he has shown. The ability of an individual to sacrifice the opportunity of a college education for a brother despite not being sharp academically requires a big heart and one that has a focus for the betterment of the future. The aspect of forgoing college by Luke for his brother Matt, who happens to be Kate, their sister’s favorite seems to cause some rift between the two brothers. Luke feels bad about the sister looking down upon him based on academic reasons despite the sacrifice Luke is able to make for the better of the whole family. Had I been in Luke’s shoes, it is very possible I would have the same feeling towards Kate. Despite the back draws that Luke has experienced in life, it is evident that his life as an old man will be one of success. Unlike his brother Matt, who despite receiving a sacrifice from his brother Luke, is still involved in misbehavior by getting involved with Pye’s daughter Maria, getting her pregnant, forcing him out of

Compare and contrast the marketing strategies of two companies Essay

Compare and contrast the marketing strategies of two companies - Essay Example Both companies like to keep their product at the introductory and growth stages of the product lifecycle by introducing new models of cars to the market. BMW Company does not like having their products at the maturity or declining stage of product life cycle. They like introducing new models of cars to the market so as to keep a competitive edge over other automobile companies in the industry. In contrast, although the Rolls Royce Company keeps their products in the introductory and growth stage of product life cycle, this company also maintains their products in the maturity and decline stage of life. This is because they target a sale market of middle-income earners (Smith, 2013). Both companies use similar market approaches so as to have a competitive advantage over other automobile companies in the market. They both produce products that serve the global needs of customers. The two companies’ produces new models of cars to suit the customers demand and recognizes the need of quality and luxury as both of their products is built on this attributes. The two companies, therefore, produces attractive and trend products that suit the needs of their customers. Both companies differentiate their market into demographic segmentation. This market is segmented into income, age, and gender. Therefore, the two companies produce products that favor these segments of the market. BMW produce products that target high-income earners basing on the economic segment. Their target customers are those with an income of $75,000 unlike the Rolls Royce, who targets customers with an income of more than $30, 000. These makes BMW brands most common among the rich while the Rolls Royce more common among the middle-income earners ( Simms & Trott, 2007). Both companies have a good number of market dealership and imports from no dealership-networked countries. They both have various manufacturing plants in Germany and UK with the companies operating in more than 100

Carpetright plc financial comparison Coursework

Carpetright plc financial comparison - Coursework Example Mohawk Industries is a company in the US producing floor covering products for commercial and residential applications lines distributed in the United States and Europe. It has a total of 36,200 employees and a recent reported market capitalization of. 1.77billion US dollars. It has total outstanding share of 68.4million US dollars. Carpetright specializes on floor covering and has more than 300 stores all over Great Britain. It is based in United Kingdom, sells and retails a range of carpets, rugs, vinyl and laminates together with associated accessories. Recent addition to their line of business is linoleum and wooden floorings. As of 2007, the company has 3,273 employees. Recent financial figures of Carpetright shows market capitalization of 402.69M, with a total share outstanding of 67.2M The growth rates, price ratios, profit margins, financial condition, investment returns, management efficiency as of 2007 year end and a ten year summary of financial data of these companies will be presented in tables to show relative relation of Carpetright with the others on the same industry. First, we will have the price ratios of the three carpet makers in the market. Price earning ratio gives us the valuation ratio of the company’s current share price compared to it’s per share earning. In this case, current ratio is 6.2 for Carpetright, and for the carpet industry, 7.6, Mohawk has no available figure. With P/E ratio investors expect a higher earning growth compared to a company with lower P/E. Comparing the P/E ratio of Carpetright to the industry on a 5 year level, Carpetright maintains a high P/E. Investors should not base investment decisions on P/E measures alone, as Investopedia says the earnings is based on an accounting measure of earnings that is susceptible to manipulation. Being so, rightful decision should

The Charter of Fundamental Freedom adds little to the body of general Essay

The Charter of Fundamental Freedom adds little to the body of general principles developed within the EU system. Discuss - Essay Example Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interests recognised by the union or the need to protect the rights and freedoms of others.†(Art. 52.1)1 It can be argued that the charter of fundamental rights of the European Union does not introduce human rights to the EU context. Most national constitutions include their own human rights catalogue. This in itself cast doubt at to whether the charter added much to the EU principles. â€Å"The provisions of this charter are addressed to the institutions and bodies of the Union with due regard for the principle of subsidiarity and to the member states only when they are implementing Union law.† The charter have a political objective of enhancing European identity among the citizens. The distinction between the political pitfalls and the legal achievements of the constitutional process extends to the charter of fundamental rights. It can be said that the original simplicity of a single constitutional document including among others, the charter of fundamental rights is replaced by the continuation of the acrimonies temple construction of different Treaties, and legal sources. A typical example, is the recent coming into force of the Lisbon treaty in which obscurity replaces real clarity. Legal reforms measures are easily maintained, while the political objectives are largely abandoned. The so called identity-enhancing potential of the charter of fundamental rights is further diminished by the protocol number 30 attached to the treaty of Lisbon which concerns the application of the charter to Poland and the UK. In addition, the charter of fundamental rights, solemnly proclaimed at Nice in December 2001, constitutes a powerful assertion of the importance of weaving the protection of fundamental rights deep into the very fabric of the

A relationship between being a victim of cyber-bullying and adolescent Essay

A relationship between being a victim of cyber-bullying and adolescent emotional well-being - Essay Example Cyberbullying is an exceptional bullying that has increased a significant amount of attention in the recent past. There is much literature concerning online harassment and cyberbullying; most of these studies have concentrated on the prevalence cyberbullying behaviors among school students. Few of them have established a relationship between self-esteem and cyberbullying. Which seems to be a key contributor of criminal behavior and academic performance and other behaviors associated with the adolescent development (Hinduja & Patchini, 2010a). Hinduja & Patchini defines self-esteem as â€Å"a favorable or unfavorable attitude toward the self.†( Hinduja & Patchini, pg. 1. It can also be said to â€Å"an internal representation of social acceptance and rejection, and a psychological gauge monitoring the degree to which a person is included vs. excluded by others.† (Hinduja & Patchini 2010, pg.1). From these two views self-esteem is a perception about ones belief, and it is affected by an individual participation in the social world. In practice, cyberbullying behaviors are often the same as relational, psychological and indirect forms of traditional bullying. For example, harassment, rumor spreading, exclusion and threatening. However, there are a number of characteristics that distinguish the two forms. First, cyberbullies always remain anonymous, but research has shown that most victims always know who is bullying them within the social cycle. Second, the absence of regulatory institutions that manage cyberspace interactions makes it hard for the bullies to be found. According to Tokunaga (2010), more than 97% of the youth are able to reach one another through internet. Computer and other electronic technology have been at the center of evolution of human behavior. As oppose to the benefits that come along with technology, the youth has taken the advantage of it and are now