Wrong Answer Notes MG301

Mock Michaelmas 2017

* Nash Equil - best response to what players believe to be other's strats and those beliefs are true
* Strategic compliments are for games
* When in doubt: differentiate, find unknowns, make first diff equal to zero
* Don't forget about commitment by the incumbent in entry games
* Need to find x, the consumer in hotelling questions. It's gonna be complicated as fuck. Fucking hell jesus christ.

Mock Lent 2015

* TLDR: you get the concept but sometimes fuck up the calculations or remember all the details, learn exact definition from answers!
* pay to play, piece rate = profit margin for optimal pay for performance
* measure performance, less risk-averse worker the better, more financially able the worker the better, more alignement with company and consumer the better - less adaptation costs, reduce multitasking by incentivising activities that benefit firm, know which activities benefit firm
* Check - worker sees entire firm/team surplus. No check - worker sees only own surplus
* Set optimal output as goal and if not achieved, nobody gets anything. Budget breaking. Where does money go? Who takes it? How can you ensure nash equilibrium?
* RPE - others do better, I get less. JPE - others do better, I do better.
* There are two types of knowledge: tacit and explicit.
* There is a cost to learning knowledge
* There usually always is a cost to dong things. People will try not to them if cost is not as good as payoff.
* Problems occurring is based on probability. Assessing whether to learn knowledge to solve these problems is based on probability of problem occurring and personal cost of learning the knowledge.
* Knowledge can be costly to transfer
* Rent and quasi-rent. The terms are: asset, return, owner, transaction, bargaining. Not colloquial terms.
* Larger the quasi-rent, the more bargaining there is.
* own profit + 1/n(joint surplus - own profit - the other guy's profit)

Specimen 2015

* Decision Making in Organisations
* probabilities
* when calculating expected profits calculate in terms of what the manager thinks the profit will be not the worker
* when not investing, you multiply zero by the probability of the profit occurring
* as long as E(profit)>0 (make subject p) to find the condition of investing for manager
* Find the investing conditions for worker and manager. Compare the two using >, < signs and find the condition for which worker will be delegated decision making.
* Structure of Organisation
* when all costs are observable, use a sequential tree diagram to see what the manager will do
* which one they will send is self explanatory, the lower cost one is sent
* the cost they are willing to pay for information is: cost from no info - cost with full info, ie the amount they save from knowing everything because they usually have higher costs from lack of info
* Entry and comp
* subgame nash equilibrium - the profile of strategies that lead to a nash equilibrium in every subgame
* think sequentially even though the question doesn't seem like it in a sequential entry game

Summer 2016

* Write down the topic of the question at the top to trigger memory.
* The questions are not going to be too ridiculous, don't worry.
* Pay for performance
* marginal benefit = marginal cost when actions can't be monitored
* Information symmetry, asymmetry, signalling
* remember fractions
* Innovation
* Drastic innovation leads to monopoly profits
* Remember market structure. Homogeneous goods is perfect competition and make zero profits.
* In non drastic innovation the firm with the innovation will charge market price but use the lowered cost for calculating profits
* Competitive Advantage
* Differentiation softens price competition
* Complimentary firms can have strong bargaining power to reduce value captured
* 1/n-cost for no monitor R - cost for monitor

Summer 2015

* Ask yourself: What would X want to maximise? What is the minimum amount that would satisfy X? What are the conditions needed to satisfy the maximisation condition?
* Strategic Compliments and Strategic Substitutes are different from Compliment goods and Substitute goods. Lambda > 0 is Former. Lambda < 0 Latter.
* As Lambda ~> 1 products become homogenous substitutes. As Lambda ~> 0 products become differentiated. As Lambda < 0, products are compliments.
* Sometimes questions don't ask general stuff, they ask stuff specific to the question situation
* Forced contract(can see worker effort) = Profit - Wage. Wage = Cost of effort by worker. Diff by effort for optimal effort given by worker.
* If unable to see worker effort = Profit - Wage - Bonus. Diff by bonus b for optimal bonus.