Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life (Paperback)

by Avinash K. Dixit (Author), Barry J. Nalebuff (Author) "We begin with ten tales of strategy from different aspects of life and offer preliminary thoughts on how best to play..." (more)
Key Phrases: poison pill, credible commitments, unconditional move, Thinking Strategically, United States, Case Studies (more...)

Editorial Reviews

From Publishers Weekly
Most books on game theory either focus on specialized applications (cardplaying, business, nuclear war) or bore with mathematics and jargon. Free of formulas and argot, this refreshing exception distills the principles, concepts, tools and techniques--brinkmanship, bargaining, unconditional moves, vicious circles, etc.--with an astonishing diversity of illustrative examples drawn from political campaigns, baseball, neighborhood dynamics of segregation, the military draft, speed limits, childrearing and so forth. In helping strategists anticipate rivals' responses and win the game, economics professors Dixit and Nalebuff (who teach game theory at Princeton and Yale, respectively) provide managers, negotiators, athletes, parents and other game-players with a formidable weapon. Drawings. BOMC, Fortune Book Club and QPB selections.
Copyright 1990 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

From The Washington Post
A fascinating new book that can be read with real pleasure....The problem is, of course, that if Dixit and Nalebuff can improve your strategic IQ, they can improve your competitor's as well.

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Product Details

• Paperback: 416 pages
• Publisher: W.W. Norton & Co. (April 17, 1993)
• Language: English
• ISBN-10: 0393310353
• ISBN-13: 978-0393310351
• Product Dimensions: 8.1 x 5.4 x 1.2 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars See all reviews (44 customer reviews)
• Amazon.com Sales Rank: #10,968 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

35 of 36 people found the following review helpful:

5.0 out of 5 stars 380 pages that changed my perception of conflicts, July 27, 2002

By	Alexei Proussakov (Russia) - See all my reviews

CONTENTS: Professors Avinash Dixit and Barry Nalebuff begin the book with explanation of sequential-move games governed by the principle `look ahead and reason back'. Then simultaneous-move games are introduced by means of prisoners' dilemma, the situation when by playing their dominant strategies (thus theoretically maximizing their payoff) both sides get the outcome that is jointly worse than if they followed the strategies of minimizing their payoff. The paradox lies in interdependency of sides' outcomes. To resolve the problem the competitors have to cooperate i.e. follow their less desired strategies. Temptation to brake rules unilaterally is very strong, to make it worse you cannot control your opponent's move in the game. The rule `look ahead and reason back' does not work either. But one can manage this.

To tackle the problem strategists transform simultaneous-move games into sequential-move games. That is where the notion of strategic move comes into play. Strategic move is an action designed to alter beliefs and actions of others in a direction favorable to yourself. Strategic move will purposely limit your freedom but in return it will limit your opponent's freedom. Threats and promises are examples of strategic moves that are widely used. Another example of strategic move explained in the book, brinkmanship, consists in creating and maintaining risk of mutually bad outcome. Unlike the compelling threat, brinkmanship does not secure bad outcome, it does not even tell when it may occur. It is left to your opponent to guess at any point in the game if you are on the brink of disaster. By defying yourself an opportunity to influence the situation and making your opponent understand that he is the only capable to resolve the conflict you induce him to compromise.

Then it comes to multi-person games where interdependence is so complex that the outcome seems absolutely unpredictable. Voting is an example of an imperfect system that cannot aggregate up individuals' preferences into a will of the people. The authors show how result of voting depends on the scheme of voting that gives way for manipulation.

When discussing bargaining the authors explore how different schemes of bargaining change sides' power and affect the result. Time is money for both sides but it is likely that they discount future at different rates thus one side gets competitive edge. Simultaneous bargaining can open up possibility for mutually beneficial trade-off, especially when sides value items differently.

OVERALL: The book is well structured and written in an easy-to-understand language, though in some cases it shows contradictions and some explanations seem oversimplified. It is rich in examples and offers cases from different spheres of life. This book instills mathematical approach to problems without going deep into mathematics. So the book will not put off `mathematically disadvantaged' readers. Even in case this book is the only you read on strategy, you will acquire knowledge that is indispensable nowadays. The book changed my perception of conflicts, games and bargaining.

44 of 49 people found the following review helpful:

4.0 out of 5 stars Shoot into the Air, December 29, 2003

By	X "Buce" (Palookaville) - See all my reviews

Larry, Mo and Curly have undertaken a three-way duel. There will be two rounds. In the first round, each player gets one shot - first Larry, then Mo, then Curly. At the end of the first round, each survivor gets a second shot, in the same order. Larry is a poor shot, with a 30 percent success rate. Mo is better: he hits 50 percent. Curly never misses.

What should Larry do? The answer is that he should shoot into the air. By wasting his shot, he maximizes his chances of survival. Such is the analysis of the authors of this remarkable introduction to game theory.

One virtue of this book is its geniality: For Dixit and Nalebuff, game theory is full of anecdote and surprise, and they give you the sense that they like nothing better than to share their enthusiasm with others. (Geniality footnote: I probbly shouldn't noise this around, but one day I ran into a problem with an equation in a (different) Dixit book. I sent him an email; I got a response in an hour). A tradeoff for geniality is that they pay a price in structure: to get a coherent framework - even for some of their own best stories - you may have to go elsewhere (Professor Rappaport's textbook may be a good second choice). But it is hard to find any book that does better at conveying a sense of the excitement and challenge of game theory as a discipline).

Comparison shopper's note: I've used this in working with law students. Game Theory for Lawyers, by Baird, Gertner and Jackson, might seem closer on point. But it lacks those little four-block boxes that are a staple of game theory instruction, and for a beginner is bound to be pretty impenetrable without them.

29 of 33 people found the following review helpful:

5.0 out of 5 stars Great Game Theory book, September 29, 2002

By	T SANTOSO (Surabaya, Jatim Indonesia) - See all my reviews (REAL NAME)

This is my first contact with game theory reading, and i enjoy it very much. It is a required reading at University of Chicago Executive MBA program, Competitive Strategy course.
The content is quiet condense and within everybody's grasp. There is not much mathematical stuff inside, which is good ;-).
It is true that there is much simplification in any game theory, but up to know that is the best possible explaination into the real world, there is no other way to understand the things better. It you are like me, with no prior economic academic background, this book is an eye openner. I enjoy reading it very much. Most of you will.