Strategy

In a preceding paper we have introduced a new approach for solving a wide class of Markov decision problems in which the state-space may be general and the system may be continuously controlled. The criterion is the average cost. This paper discusses two applications of this approach. The first application concerns a house-selling problem in which a constructor builds houses which may be sold at any stage of the construction and potential customers make offers depending on the stage of the construction.

Examines the quantity-setting behavior under price uncertainty. Probability of loss; Use of the monotonicity property of distributions; Changes in fixed costs, price, and taxes.

In his fundamental works and Douglas Vickers integrates the production, investment and financing decisions of the firm into a useful and illuminating model. He deals with uncertainty using risk-adjusted capitalization and interest rates, assumes constant business risk and treats financial risk as a function of leverage. This paper extends Vickers' analysis by allowing business risk to depend on production and investment decisions.

This research paper presents an in-depth study of two systems developed by a British oligopolist's one system for sales volume forecasting, the other system for day-to-day decisions on pricing. The paper describes two decision systems employed by a firm in an industry characterized as undifferentiated oligopoly; the development of terms of trade to suit market conditions and of short-term expectations with regard to volumes.

Article reprinted with permission from the Journal of Marketing Research, published by the American Marketing Association, Don Sexton, 11, no. 1 (February 1974), pp. 109-14.

Historically, when a major new type of machine has been built, men have at first been too apprehensive about what it would do to them immediately. Then, after it has been around for a while and hasn?t put them out of work, they have become too complacent about what its longer term effects would be. Today, many marketers behave as though they were in the stage of overcomplacency about the long-range impact of the computer. They seem sure it is not a near-term threat, so they give it mostly mundane chores and, in a sense, assume it will always be simply a routine data processor.

Information provision in games influences behavior by affecting agents' beliefs about the state, as well as their higher-order beliefs. We first characterize the extent to which a designer can manipulate agents' beliefs by disclosing information. We then describe the structure of optimal belief distributions, including a concave-envelope representation that subsumes the single-agent result of Kamenica and Gentzkow (2011). This result holds under various solution concepts and outcome selection rules.

We study the competitive provision and endogenous acquisition of political information. Our main result identifies a natural equilibrium channel through which a more competitive market decreases the efficiency of policy outcomes. A critical insight we put forward is that competition among information providers leads to informational specialization: firms provide relatively less information on issues that are of common interest and relatively more information on issues on which agents’ preferences are heterogeneous.

Bank balance sheet lending is commonly viewed as the predominant form of lending. We document and study two margins of adjustment that are usually absent from this view using microdata in the $10 trillion U.S. residential mortgage market. We first document the limits of the shadow bank substitution margin: shadow banks substitute for traditional “deposit-taking” banks in loans which are easily sold, but are limited from activities requiring on-balance-sheet financing.