Locate Group Problem G15-1: Strategic Game At The End Of Cha

Locate Group Problem G15-1: Strategic Game at the end of Chapter 15 in

Locate Group Problem G15 1 Strategic Game At The End Of Chapter 15 In

Locate Group Problem G15-1: Strategic Game at the end of Chapter 15 in Managerial Economics: A Problem Solving Approach. Spend 2 or 3 hours observing the organization in which you are employed (Security). During the observation, identify internal and external interactions of the organization. You can talk to stakeholders who might have information relating to external interactions in order to gather necessary information. Use the observation information to complete all parts of the question presented in the problem.

Your response should be words. Please include the diagram required in the problem. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is not required. G15-1 Strategic Game Describe some interaction your company (Security) has with another entity (contractors) (firms producing complementary or substitute products, upstream suppliers, or downstream customers), or between internal divisions within your firm that can be described as a sequential or simultaneous game.

Diagram the strategies, players, and compute payoffs as best you can. Compute the Nash equilibria. What can you do to change the rules of the game to your advantage? Compute the profit consequences of your advice. Reference Froeb, L.M., McCann, B.T., Shor, M., & Ward, M.R. (2014). Managerial economics: A problem solving approach , (4th ed.). Boston, MA: Cengage Learning.

Paper For Above instruction

In the dynamic landscape of modern security organizations, strategic interactions with external entities such as contractors, suppliers, and clients are crucial for operational success. This paper examines the internal and external interactions of a security firm through the lens of game theory, specifically analyzing the interaction with a contractor providing security technology. The interaction is modeled as a simultaneous game, where both the security firm and the contractor choose strategies that maximize their respective payoffs, considering the actions of the other. The analysis includes diagramming strategies, computing Nash equilibria, and proposing rule modifications to improve the security firm's profit outcomes.

The chosen interaction involves the security company collaborating with a technology contractor who supplies equipment such as surveillance cameras, access control systems, or biometric readers. The security firm faces decisions regarding the level of security investment and whether to rely on a high-quality vs. a low-cost contractor. Conversely, the contractor decides on the pricing and quality level of their security products. These decisions are taken simultaneously, with each party aware that their choice influences the other's payoff, forming a strategic game.

To model this interaction, we identify the players as the security firm and the contractor. Each player has strategic choices: the security firm can choose between high or low security investment, and the contractor can offer high-quality or low-quality equipment. The payoff matrix reflects profits and costs associated with these strategies. For example, the security firm's payoff depends on the effectiveness of security measures and procurement costs, while the contractor's payoff hinges on pricing strategies and sales volumes.

The payoff matrix constructed reveals potential Nash equilibria—strategy profiles where no player can unilaterally deviate profitably. For instance, one equilibrium might involve the security firm investing heavily with a high-quality contractor, resulting in high security and profitability. Alternatively, a scenario with low security investment and low-quality contractor offerings might also constitute an equilibrium, though less desirable in operational terms.

Changing the game rules entails reevaluating contractual terms, incentives, or penalties that influence strategic choices. For example, implementing performance-based contracts or offering loyalty incentives can steer both players toward more favorable strategies. Such modifications could shift the equilibrium, leading to higher profit margins for the security firm while maintaining security standards.

The profit consequences of these modifications are analyzed through comparative statics, considering the increased efficiency or reduced costs due to improved cooperation or incentives. By altering the payoff structure, the security organization can promote strategies that favor its interests without compromising security standards. This strategic approach aligns with the managerial economic principles outlined by Froeb et al. (2014), emphasizing the importance of strategic interactions and incentive design in organizational decision-making.

References

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