The Art of Strategy – People in Business and Society
Game theory:
Game theory is about:
- Identifying determinants of human decisions in strategic situations.
- Mathematical models that describe strategic situations.
- Assumption: Humans are rational
- Understanding the situation(=game) you are facing
- Interpreting and revealing information
- Putting yourself in others’ shoes so as to predict and influence what they will do
- Outdoing an adversary is s/he is trying to do the same to you
Game theory studies:
- Strategic environments (games) that involve several players who make choices. The
payoffs that the players get depend on the choices of everybody in the game.
Game theory assumptions:
- Players are rational; they will try maximize their own payoffs (Not necessarily
monetary payoff, but also spare time, happiness etc.)
- They have to reason about how others might make their choices
- The rules of the game and rationality are common knowledge
Decisions are based on:
Individual-level factors
Experience (Past experiences)
Personality (Risktakers, Introverts)
Culture (Europeans vs. Americans)
Financial conditions (Income)
Religion (Islam, Buddhism)
Age (Youngster vs Adults)
Contextual factors
Economy
Family & friends
Politics & Regulations
Environment
Other party (Decision)
Example Game Theory: Rock, Paper Scissor
, Conditions of this game:
Equal chances of winning, losing or it ending in a tie
The other person’s choice is non-predictable
Result also depends on the action of the other party
What is an experiment?:
‘’ An experiment is an investigation in which a hypothesis is scientifically tested. In an
experiment, an independent variable (cause) is manipulated and the dependent variable
(the effect) is measured; any extraneous variables are controlled.’’
Different types of variables:
Variable: something that can be measured
Independent variable (always first):
Dependent variable (always second):
The independent variable is always first because we want to see if the independent variable
has an effect on the dependent variable, like behavioural changes or different decisions.
Different types of groups:
Treatment group/Experiment group: This group receives a different, new treatment
to see if this treatment causes any changes, be it positive or negative. This group
undergoes the treatment.
Control group: Nothing is changed in this group. We use this group to see if the
treatment causes any difference to the treatment group. It is used as a constant to
measure the treatment group against.
Hawthorne studies:
Hypothesis: Would the productivity of the workers increase if we would change the working
environment (Lights, Airconditioning) or give them more attention?
The independent variables of the Hawthorne studies:
1. The environmental changes
2. The treatment of the workers
Different types of errors:
, Human error: The way someone is feeling (moods, sickness,) can affect the
experiment.
Environmental error: The environment may affect the test results. Neighbours can
be an environmental variable. The temperature as well.
Design error: The experiment is not designed well, information may be missing or
the experiment is not complete.
Culture:
Globalisation has increased massively over the last few years.
Culture is very dynamic, norms and values are not constant and tend to change a lot.
Cultural levels:
1. National Culture (Netherlands, China, India) MAIN FOCUS
2. Organizational culture, corporate (HEMA, Bijenkorf, Shell, KLM)
3. Occupational culture (Managers, workers, accountants, doctors)
Definition of culture by Schein (2004):
‘’Culture is the sum of workable solutions for problems of external adaptation and internal
integration that a group, an organization, or a country has found.’’
Dimensions of culture by Hofstede (2011):
‘’Culture is ‘’the collective programming of the mind distinguishing the members of one
group or category of people from others.’’
There are six dimensions (4 Originals):
1.Power Distance Index (PDI)
2.Uncertainty Avoidance Index (UAI)
3.Individualism vs. Collectivism (IDV)
4.Masculinity vs. Femininity (MAS)
5.Long-Term Orientation vs. Short-Term Orientation (LTO)
6.Indulgence vs. Restraint (IND)
Game theory:
Game theory is about:
- Identifying determinants of human decisions in strategic situations.
- Mathematical models that describe strategic situations.
- Assumption: Humans are rational
- Understanding the situation(=game) you are facing
- Interpreting and revealing information
- Putting yourself in others’ shoes so as to predict and influence what they will do
- Outdoing an adversary is s/he is trying to do the same to you
Game theory studies:
- Strategic environments (games) that involve several players who make choices. The
payoffs that the players get depend on the choices of everybody in the game.
Game theory assumptions:
- Players are rational; they will try maximize their own payoffs (Not necessarily
monetary payoff, but also spare time, happiness etc.)
- They have to reason about how others might make their choices
- The rules of the game and rationality are common knowledge
Decisions are based on:
Individual-level factors
Experience (Past experiences)
Personality (Risktakers, Introverts)
Culture (Europeans vs. Americans)
Financial conditions (Income)
Religion (Islam, Buddhism)
Age (Youngster vs Adults)
Contextual factors
Economy
Family & friends
Politics & Regulations
Environment
Other party (Decision)
Example Game Theory: Rock, Paper Scissor
, Conditions of this game:
Equal chances of winning, losing or it ending in a tie
The other person’s choice is non-predictable
Result also depends on the action of the other party
What is an experiment?:
‘’ An experiment is an investigation in which a hypothesis is scientifically tested. In an
experiment, an independent variable (cause) is manipulated and the dependent variable
(the effect) is measured; any extraneous variables are controlled.’’
Different types of variables:
Variable: something that can be measured
Independent variable (always first):
Dependent variable (always second):
The independent variable is always first because we want to see if the independent variable
has an effect on the dependent variable, like behavioural changes or different decisions.
Different types of groups:
Treatment group/Experiment group: This group receives a different, new treatment
to see if this treatment causes any changes, be it positive or negative. This group
undergoes the treatment.
Control group: Nothing is changed in this group. We use this group to see if the
treatment causes any difference to the treatment group. It is used as a constant to
measure the treatment group against.
Hawthorne studies:
Hypothesis: Would the productivity of the workers increase if we would change the working
environment (Lights, Airconditioning) or give them more attention?
The independent variables of the Hawthorne studies:
1. The environmental changes
2. The treatment of the workers
Different types of errors:
, Human error: The way someone is feeling (moods, sickness,) can affect the
experiment.
Environmental error: The environment may affect the test results. Neighbours can
be an environmental variable. The temperature as well.
Design error: The experiment is not designed well, information may be missing or
the experiment is not complete.
Culture:
Globalisation has increased massively over the last few years.
Culture is very dynamic, norms and values are not constant and tend to change a lot.
Cultural levels:
1. National Culture (Netherlands, China, India) MAIN FOCUS
2. Organizational culture, corporate (HEMA, Bijenkorf, Shell, KLM)
3. Occupational culture (Managers, workers, accountants, doctors)
Definition of culture by Schein (2004):
‘’Culture is the sum of workable solutions for problems of external adaptation and internal
integration that a group, an organization, or a country has found.’’
Dimensions of culture by Hofstede (2011):
‘’Culture is ‘’the collective programming of the mind distinguishing the members of one
group or category of people from others.’’
There are six dimensions (4 Originals):
1.Power Distance Index (PDI)
2.Uncertainty Avoidance Index (UAI)
3.Individualism vs. Collectivism (IDV)
4.Masculinity vs. Femininity (MAS)
5.Long-Term Orientation vs. Short-Term Orientation (LTO)
6.Indulgence vs. Restraint (IND)
