Applying Game Theory to Strategy

Prior to engaging in this discussion, please read Chapter 16 in the text and review any relevant Instructor Guidance. It is suggested that you review the recommended articles to glean any helpful information. Imagine that you own a pharmacy in your area. One of your competitors launches a “We will not be undersold” campaign, which promises consumers 150 % of any difference between its prices and the advertised prices of other pharmacies. Evaluate the social issues in your community as well as the economic culture that is influencing this type of pricing competition. Develop and describe a microeconomic model that is responsive to the service demands of your market. Based on your conclusions, how would you react to this situation and with what business strategy would you approach this? How might you apply game theory to the creation of your strategy?Guided Response: Read several of your classmates’ posts and provide a substantive written response to at least two of your peers. Discuss whether or not you agree with the conclusions provided in your classmate’s initial post. Choose one aspect with which you disagree and offer an option of how game theory could illustrate a coherent framework to best react to a competitor. Explain why you believe this is a better option than what your classmate already proposed, and provide at least one scholarly reference to support your position. You must also comment specifically on one aspect of your classmate’s post with which you agree. Provide a brief explanation as to why the proposed course of action would be effective, and support your opinion and assertions with research. In addition to responding to at least two other students’ posts, it is recommended that you reply to at least one person who responded to your original post by either respectfully defending your conclusion or by listing how you might implement the changes your classmate suggested.

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