Deriving and analysing optimal strategies in Bayesian models of games

Article Abstract:

A graphical procedure can help to identify the form of an optimal solution for a repeated Bayesian game. J.G. Wilson's algorithm is an effective method for calculating the optimal reaction during any part of a game, but it has some disadvantages, including a lack of a method for determining the form of a strategy for a decision maker, and a lack of consideration for the criteria by which the decision maker selects a model of the opponent's reaction. The Prisoner's Dilemma game demonstrates how the algorithm developed by Wilson can be enhanced through the use of the derived analytic form of the solution to come up with an explicit optimal strategy. The strategy can then be used to determine how the decision maker should react to subsequent moves of the game and to determine whether a particular model of the opponent's reaction is realistic.

Methods, Analysis, Bayesian statistical decision theory, Bayesian analysis, Game theory, Mathematical optimization, Optimization theory, Prisoner's dilemma game, Wilson, J.G.

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Information and profitability estimates: modelling the firm's decision to adopt a new technology

Article Abstract:

One method of deciding whether a company should adopt a new technology is to develop an understanding of the company's decision-making process when selecting new technologies. K. McCardle's model demonstrates that a company considering the adoption of a new technology begins with some information and a related estimate of the profitability of the innovation. Several outcomes can occur, including that the company adopts the technology because the profit estimate is very high, the company does not adopt the technology because the profit estimate is very low, or the company seeks additional information because the estimate is somewhere in the middle. A response surface based on catastrophic theory can be used to investigate the effect of information and profitability estimates on the adoption of a new technology.

Management, Usage, Technological innovations, Catastrophes (Mathematics), McCardle, K.

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