This note discusses the classifications of general symmetric and anti-diagonally symmetric 2×2 games, illustrated with business-related examples. It also shows how 2×2 games can be used to explain and interpret business strategies such as “top dog,” “puppy dog,” “fat cat” and “lean-and-hungry look” (Fudenberg and Tirole, 1984). A strategic move basically changes a prisoner's dilemma game, coordination game or chicken game into one with a unique Nash equilibrium that favors the strategic player.
ChurchJeffreyWareRoger, 1999. Industrial Organization: A Strategic Approach, Irwin McGraw-Hill.
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→ CooperThomas, 1986. “Most-favored-customer pricing and tacit collusion,”Rand Journal of Economics, 17, 377–388.
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DixitAvinashNalebuffBarry, 1993. Thinking Strategically, New Edition, W.W. Norton.
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→ EshelIlanSamuelsonLarryShakedAvner, 1998. “Altruists, egoists, and hooligans in a local interaction model,”American Economic Review, 88(1), 157–179.
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→ FudenbergDrewTiroleJean, 1984. “The fat cat effect, the puppy dog ploy and the lean and hungry look,”American Economic Review, Papers and Proceedings 74, 361–368.
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KrepsDavidM., 1990. A Course in Microeconomic Theory, Princeton.
