Market Structures : Reynolds And Philip Morris

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Market Structures - R.J. Reynolds and Philip Morris Game theory allows business experts to examine decision-making in oligopolistic interdependent cases. Applying the game theory allows one to present the situation in a simple background by creating formalized models to analyze the possible results (Bhat and Rau, 2008). The outcomes may be cooperation (or collusion) and conflict (or competition), which will influence the oligopolistic company’s choice of best strategy if faced with such outcomes. Prisoner’s Dilemma game The prisoners’ dilemma is the widely used game of strategy in business. It enables one to appreciate what controls balance between competition and cooperation in various settings (Townsend, 1995). In the traditional version of the prisoners’ dilemma the police arrest and are interrogating two suspects in two separate rooms. Each suspect can either confess; and hence implicate the other, or can keep silent. Confession is a way each can improve their position, regardless of the other suspect’s actions. However, if one suspect confesses, it would need one to do the same to avoid a harsh sentence (Thomas and Maurice, 2008) on a recalcitrant holdout. But, if the other prisoner keeps silent, then one can be given some favorable treatment offered to a state’s witness due to confessing. The prisoner 's dilemma is mainly a decision analysis puzzle where two people are performing with their interest take actions that do not finally develop in best outcome. The

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