TAILIEUCHUNG - Microeconomics for MBAs 21

Microeconomics for MBAs 21. The Economic Way of Thinking for Managers. Microeconomics for MBAs develops the economic way of thinking through problems that MBA students will find relevant to their career goals. Maths is kept simple and the theory is illustrated with real-life scenarios | Chapter 6. Reasons for Firm Incentives 19 have shown that people will be more cooperative with more equal shares of whatever it is that is being divided and women are more inclined to favor equal shares than men . People are willing to extend favors in cooperative ventures in the knowledge that the favor will be returned. They will work harder when they believe they are not underpaid. People are more likely to cooperate with close family members and friends than far-removed strangers and they will be less likely to cooperate with others whether close at hand or far removed when the cost of cooperating is high. They work harder in other words when they believe they are among members of their relevant in-group. Even training can be more effective in raising worker productivity when it is provided within in-groups regardless of whether they come from collectivistic or individualistic societies. Why is it that people are inclined to cooperate more or less naturally Wilson repeats a favorite example of game theorists to explain why cooperativeness might be partially explained as an outcome of natural selection. Consider two people in early times Trog and Helga who are subject to attack by sabretooth tigers. The game they must play in the woods is a variant of the prisoner s dilemma game. If they both run then the tiger will kill and eat the slowest runner. If they both stand their ground -- and cooperate in their struggle - then perhaps they can defeat the tiger. However each has an incentive to run when the other stands his or her ground leaving the brave soul who stands firm to be eaten. What do people do What should they do Better yet what do we expect them to do -- eventually We suspect that different twosomes caught in the woods by sabretooth tigers over the millenniums have tried a number of strategies. However running is over the long run a strategy for possible extinction given that the tiger can pick off the runners one by one. We should not be surprised that .

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