Comments on: The Tragedy of the Commons: Working During Holidays and Why Thanksgiving Almost Didn’t Happen http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/ Articles on game theory and personal finance Thu, 29 Jul 2010 12:43:59 -0500 hourly 1 http://wordpress.org/?v=3.0 By: Presh Talwalkar http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/comment-page-1/#comment-922 Presh Talwalkar Sat, 16 Feb 2008 01:03:57 +0000 http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/#comment-922 @Mahesh: Your answer sounds like what Gladwell describes in "Blink"--a snap decision (a book I read because of reader Clyde Smithson above). Wow, thanks for the William Poundstone recommendations. I skimmed the summaries and there are like 4 books I want to read from him now. This makes me realize that I'm going to have to come up with some formal way that readers recommend books to me; I've gotten so many good suggestions already. @Mahesh: Your answer sounds like what Gladwell describes in “Blink”–a snap decision (a book I read because of reader Clyde Smithson above).

Wow, thanks for the William Poundstone recommendations. I skimmed the summaries and there are like 4 books I want to read from him now.

This makes me realize that I’m going to have to come up with some formal way that readers recommend books to me; I’ve gotten so many good suggestions already.

]]> By: Mahesh http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/comment-page-1/#comment-918 Mahesh Fri, 15 Feb 2008 23:41:12 +0000 http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/#comment-918 As I go back in time in the Spring of 92, the answer was more by instinct, intuition and gut feel than an analysis as described above and Nash was on the verge of receiving the Nobel Prize. One book that really sharpened my thinking was "How do you move Mt. Fuji?" by William Poundstone. I read a couple of more of his books and I am better off for it. Strongly recommend reading his books. As I go back in time in the Spring of 92, the answer was more by instinct, intuition and gut feel than an analysis as described above and Nash was on the verge of receiving the Nobel Prize. One book that really sharpened my thinking was “How do you move Mt. Fuji?” by William Poundstone. I read a couple of more of his books and I am better off for it. Strongly recommend reading his books.

]]> By: Presh Talwalkar http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/comment-page-1/#comment-908 Presh Talwalkar Thu, 14 Feb 2008 00:19:41 +0000 http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/#comment-908 @Mahesh: Nice answer. I like that the answer combines all sorts of game theory concepts: finding out your competitor's strategy, delaying action, and getting commitment. Well done. @Mahesh: Nice answer. I like that the answer combines all sorts of game theory concepts: finding out your competitor’s strategy, delaying action, and getting commitment. Well done.

]]> By: Mahesh http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/comment-page-1/#comment-905 Mahesh Wed, 13 Feb 2008 19:31:28 +0000 http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/#comment-905 The answer to the sales test. A couple of "valid" assumptions. I am going to assume that my competitor cannot offer un-approved discounts either to make the game fair. Another assumptions is that I am purely selling a commodity and the customer cares only about price. I have had some sales people say that they will offer something which is an intabgible extra which cannot be measured and so are having and developing personal relationships whatever that means. I am also assuming that the customer can delay the decision. The customer is going to make the decisions purely on price. Given that, here is the solution. The only way out here is to extend the end game and have the customer delay the decision making. The customer is being offered a discount by your competitor. What you can do to extend the end game is to offer a bigger discount than your competitor but at the same time request more time to get approvals. Since the customer is buying a commodity and is going to make a decision purely based on price, then the bigger discount you are offering should be attractive enough for the customer to delay the decision and for you to go get the approvals. You can then go back to your management to get the bigger discount and make the sale and keep your job. Another benefit of this strategy is that you will have get an idea of what discounts that you are competitors are offering to their customers which is valuable information for sales management. It would be even better if the customer documented that expectation instead of a verbal statement. The bigger discount you are offering should carry that caveat of documenting the price expectation by the customer which could benefit your management. You would make a good "agent" for the "principal" by finding that discount percentage in a careful manner by calibrating it down slowly instead of doing it steeply. You can then get some kind of committment that the customer will cease negotiations and make the deal happen and not play a "Race to the Bottom". I did get the job... The answer to the sales test.
A couple of “valid” assumptions.
I am going to assume that my competitor cannot offer un-approved discounts either to make the game fair.
Another assumptions is that I am purely selling a commodity and the customer cares only about price. I have had some sales people say that they will offer something which is an intabgible extra which cannot be measured and so are having and developing personal relationships whatever that means.
I am also assuming that the customer can delay the decision.
The customer is going to make the decisions purely on price.

Given that, here is the solution. The only way out here is to extend the end game and have the customer delay the decision making. The customer is being offered a discount by your competitor. What you can do to extend the end game is to offer a bigger discount than your competitor but at the same time request more time to get approvals. Since the customer is buying a commodity and is going to make a decision purely based on price, then the bigger discount you are offering should be attractive enough for the customer to delay the decision and for you to go get the approvals. You can then go back to your management to get the bigger discount and make the sale and keep your job. Another benefit of this strategy is that you will have get an idea of what discounts that you are competitors are offering to their customers which is valuable information for sales management. It would be even better if the customer documented that expectation instead of a verbal statement. The bigger discount you are offering should carry that caveat of documenting the price expectation by the customer which could benefit your management.
You would make a good “agent” for the “principal” by finding that discount percentage in a careful manner by calibrating it down slowly instead of doing it steeply. You can then get some kind of committment that the customer will cease negotiations and make the deal happen and not play a “Race to the Bottom”.

I did get the job…

]]> By: Presh Talwalkar http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/comment-page-1/#comment-870 Presh Talwalkar Mon, 11 Feb 2008 05:41:12 +0000 http://mindyourdecisions.com/blog/2007/12/11/game-theory-tuesdays-an-annoying-time-to-work/#comment-870 @Clyde Smithson: Nice--thanks for the link. @Clyde Smithson: Nice–thanks for the link.

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