Chapter 3 Game Theory Presented by: Bob Everhart and Kali Jackson

PARTS is PARTS  Players  Added Value  Rules  Tactics  Scope

Here’s the Game:  52 cards are involved (a full deck, for those who don’t gamble or play solitaire)  Bob keeps the 26 Black Cards and the 26 Red Cards have been distributed to you (1 each)  There’s $2,600 in Prize Money-$100 for each pair of one red and one black card  “Who’s got the Power?”

Added Value  The Key to understanding who has the power in the Game

Rules and Tactics (Perceptions)  A set of restrictions and/or actions that can change the game.

Scope  Understanding there are certain outside elements that will influence the game. Such as Rationality or Irrationality.

Allocentrism  “When I am getting ready to reason with a man I spend one-third of my time thinking about myself and two- thirds thinking about him and what he’s going to say.” Abraham Lincoln Abraham Lincoln

The “Real World”  How do we relate this material to a real world marketing scenario.

Media Buying Example  You are a media buyer, either for a business or an agency and you have $10, 000 to spend on a radio buy for your product or business.  You have narrowed your target market to 45+ year old females.  There are two stations that fit that demographic in your market and you start negotiations with the first station.  Who are the Players? Who has the Power? What’s the Added Value? Rules? Tactics?

Game Theory  The five elements of any game: Players, Added values, Rules, Tactics, and Scope.  Recognize as a single whole, but look at each component individually.  It is how you understand what’s going on in any game.