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Using Evolutionary Game Theory to Deter Competitor Market Entry

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Companies that innovate lead the market but often attract market chasers that seek to gain financial benefits of producing similar products. For organizations that have invented new products and services this can be an annoying aspect of doing business if high profits must now be shared with other market entry companies. To avoid easy access by competitors a company may desire to use a deterrence or shakeout strategy. A study in the Journal of Academy of Marketing Science discusses how evolutionary game theory is used to understand whether a deterrence strategy and a shakeout strategy are more successful in keeping new businesses of out the market (Homburg, et. al, 2013). The method a company uses will determine whether or not they will be effective in ensure the costs are too high for other firms to pursue. A deterrence strategy seeks to block potential competitors from entering the market. Strategies may include limit pricing, raising switching costs, new innovations

Game Theory Shows Selfish People Eventually Lose-MSU Study

Christoph Adami, a professor of microbiology and molecular genetics at Michigan State University shows through his study that if you are selfish evolution will punish you. Teaming with Professor Arend Hintze they used hundreds of thousands of game theory simulations in biology, economics, political science and other disciplines to determine their results. They found that those who played the selfish zero-determinant game eventually lost.  Selfish people who were playing against a single cooperative opponent won but lost against multiple players. They took advantage against those who they could recognize and determine their strategies. However, when they played in a larger field and did not know whom they were dealing with and the various types of cooperative and zero-determinant players they were playing against they eventually were beaten into a more cooperative stance.  Let us assume for a moment you are dealing with an inherently selfish person and they have a history o