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Game Theory - Application to Banking and Finance

seminar UZH

seminar UZH

13
0.0 (0)
Fabienne Keller
Lernen
Fabienne Keller
This flashcard set introduces primary school students to the principles of game theory and its practical applications in banking and finance. It explores concepts like pricing strategies, the impact of renting versus selling, and the importance of credibility and cooperation in business. The flashcards delve into how firms like IBM manage prices and costs, especially for high-tech items, and discuss methods to establish credibility and principles of cooperation. This set is beneficial for young learners interested in understanding economic principles and their real-world applications in competitive markets.
Karten
13
Lernende
8
Sprache
Englisch
Kategorie
VWL
Stufe
Grundschule
Erstellt / Aktualisiert
11.04.2013 / 11.12.2020
  • 1  / 13

Lernkarten

What are the special features of the costs for producing high-tech items?

High-tech items are subject for very high research & development costs. However the marginal costs are quite low.

When IBM sells a computer, is it the firm's interest to decrease the charged price trough time?

Yes, because once the demand is served according to the original price, IBM has an incentive to decrease the price to serve customers with a lower reservation price.

Then repeating the decrease again & again until the prize equalizes the marginal cost.

Would a price decrease modify some customer's behavior?

Yes, some customers with a reservation price above the original may still prefer to wait a price decrease. (because they know it will decrease)

When IBM rents a computer, is it the firm's interest to decrease the price that is charged through time?

When the computers are rented, any price decrease cost a higher amount because the decrease applies to all computers, not only the ones in the IBM stocks.

What is the advantage for renting rather than selling?

Renting rather than selling allows IBM to credibly commit to not decrease the price. Customers have no more incentive to wait any price decrease.