A reason for unreason: returns based beliefs in game theory

Players cooperate in experiments more than game theory would predict. We introduce the ‘returns-based beliefs’ approach: the expected returns of a particular strategy in proportion to total expected returns of all strategies. Using a decision analytic solution concept, Luce’s (1959) probabilistic choice model, and ‘hyperpriors’ for ambiguity in players’ cooperability, our approach explains empirical observations in various classes of games including the Prisoner’s and Traveler’s Dilemmas. Testing the closeness of fit of our model on Selten and Chmura (2008) data for completely mixed 2 × 2 games shows that with loss aversion, returns-based beliefs explain the data better than other equilibrium concepts

Dominance and Innovation

Do dominant or less dominant firms innovate more? Theoretically it has been shown that within an asymmetric mixed strategy game of a patent race, the less dominant firm invests more than the dominant firm. But the empirical data on patent races is divided. In this paper, we argue that the decisions that concern strategic choice in innovation may be influenced by expected relative returns. Our approach, which we call the returns-based beliefs approach, is based upon subjective probabilities. It combines a decision analytic solution concept and Luce’s (1959) probabilistic choice model. In particular, we show how the use of the returns-based beliefs approach provides support for the thesis that dominant firms invest more in R&D within an asymmetric mixed strategy game. Consequently, we argue that the returns-based beliefs approach is more in line with recent empirical studies of innovation. We also provide empirical evidence using UK R&D data across a range of industries from 2001-2006 that shows that firms’ spending on R&D is related more to their own profitability than that of their competitors, which is consistent with the returns-based beliefs approach. We discuss the managerial implications of our theoretical approach and the empirical findings

A Reason for Unreason: Returns-Based Beliefs in Game Theory

Players cooperate in experiments more than game theory would predict. We introduce the ‘returns-based beliefs’ approach: the expected returns of a particular strategy in proportion to total expected returns of all strategies. Using a decision analytic solution concept, Luce’s (1959) probabilistic choice model, and ‘hyperpriors’ for ambiguity in players’ cooperability, our approach explains empirical observations in various classes of games including the Prisoner’s and Traveler’s Dilemmas. Testing the closeness of fit of our model on Selten and Chmura (2008) data for completely mixed 2 × 2 games shows that with loss aversion, returns-based beliefs explain the data better than other equilibrium concepts

Divine Innovation: Religion and Service Provision by Religious Organizations in India

This paper examines innovations to religious and non-religious service provision by religious organizations in India. We present a stylized Hotelling-style model in which two religious organizations position themselves at opposite locations to differentiate themselves on the religious spectrum in order to compete to attract adherents. Moreover, the model predicts that economic inequality can make both organizations increase their provision of non-religious services to retain adherents. In order to test our propositions, we present unique primary survey data on the economics of religion that we have collected from 2006-2008 on 568 Hindu, Muslim, Christian, Sikh and Jain religious organizations spread across seven Indian states. We use these data to provide qualitative and descriptive statistics from the survey that is consistent and provides initial support for our propositions. We show that these organizations have substantially increased their provision of religious and non-religious services, but that there are significant variations by religion. We also provide quantitative evidence based on econometric testing to highlight that Indian religious organizations are maximizing the differences in their ideology with respect to other organizations, and are also providing higher education and health services as economic inequality increases in India

Communication and Marketing of Services by Religious Organizations in India

Marketing communication is a vital strategic tool for religious organizations to achieve competitive differentiation. The determinants of religious organizations’ use of direct and indirect communication channels offers valuable insights into their modus operandi. This paper uses novel primary survey data on 568 Hindu, Muslim, Christian, Sikh and Jain organizations spread over 7 major states in India that we collected over the period 2006-2008, to investigate the determinants of communication channel selection by religious organizations. The findings suggest that state-specific effects for Karnataka, Maharashtra, Uttar Pradesh and West Bengal; and religion-specific fixed effects for Muslims play a predominant and persistent role in communication channel selection decisions. Religious organizations adopt direct channels more extensively to communicate changes to non-religious service provision. In a competitive framework, religious organizations also use indirect channels more extensively in response to information received about competitors. Additionally, intensive market competition leads religious organizations to increase their use of direct channels in response to information received about competitors through direct channels. Collectively, the findings suggest that across all religions in India, marketing communication plays a very important role for religious organizations in order for them to differentiate themselves from other competitors

Divine competition: Religious organizations and service provision in India

This paper examines religious and non-religious service provision by religious organisations in India. We present a stylized Hotelling-style model in which two religious organisations differentiate hemselves on the strength of religious beliefs in order to compete in attracting adherents. We show in the model two central predictions: first,that the organisations will differentiate themselves on the strength of religious beliefs. Second, that in equilibrium, economic inequality makes the organisations increase their provision of non-religious services. To test this, we present unique primary survey dataon the economics of religion, collected by us between 2006 and 2010 from 568 Hindu, Muslim, Christian, Sikh and Jain religious organisations spread across 7 Indian states. We use these data to demonstrate that the organisations have substantially increasedtheir provision of non-religious services. We also provide quantitative evidence based oneconometric testing to highlight that religious organisations are differenting themselves on the strength of religious beliefs with respect to other organisations, and are also providing higher education and health services as economic inequality increases in India

Divine Competition: Religious Organisations and Service Provision in India

This paper examines religious and non-religious service provision by religious organisations in India. We present a stylized Hotelling-style model in which two religious organisations differentiate hemselves on the strength of religious beliefs in order to compete in attracting adherents. We show in the model two central predictions: first,that the organisations will differentiate themselves on the strength of religious beliefs. Second, that in equilibrium, economic inequality makes the organisations increase their provision of non-religious services. To test this, we present unique primary survey dataon the economics of religion, collected by us between 2006 and 2010 from 568 Hindu, Muslim, Christian, Sikh and Jain religious organisations spread across 7 Indian states. We use these data to demonstrate that the organisations have substantially increasedtheir provision of non-religious services. We also provide quantitative evidence based oneconometric testing to highlight that religious organisations are differenting themselves on the strength of religious beliefs with respect to other organisations, and are also providing higher education and health services as economic inequality increases in India

Probabilistic Choice Models

We examine a number of probabilistic choice models in which people might form their beliefs to play their strategies in a game theoretic setting in order to propose alternative equilibrium concepts to the Nash equilibrium. In particular, we evaluate the Blavatskyy model, Returns Based Beliefs (RBB) model, Quantal Response Equilibrium (QRE) model, Boundedly Rational Nash Equilibrium (BRNE) model and the Utility Proportional Beliefs (UPB) model. We outline the foundational axioms for these models and fully explicate them in terms of probabilistic actions, probabilistic beliefs and their epistemic characterizations. We test the model predictions using empirical data and show which models perform better under which conditions. We also extend the Blavatskyy model which was developed to consider games with two actions to cases where there are three or more actions. We provide a nuanced understanding of how different types of probabilistic choice models might predict better than others

A Systems Perspective on Business Model Evolution: The Case of an Agricultural Information Service Provider in India

This paper explores how the organizational capabilities of a firm enable business model evolution by examining the development of a new firm that provides mobile-phone-based information services for farmers in India. We argue that these organizational capabilities are part of the dynamic capabilities of the firm. We use a longitudinal and in-depth single case study to extend our understanding of the mechanism for business model evolution in new firms. The study shows three themes emerging from the data analysis of the case study by drawing on the literatures on systems thinking, dynamic capabilities and business model evolution. The three themes are balanced redundancy, requisite variety and cognitive discretion, which enable a firm to achieve congruence between the components of the business model in order to deliver the customer value proposition. We explain how these three themes form the micro-foundations of dynamic capabilities that enable a firm to evolve its business model. We contribute to the business model and dynamic capabilities literature by proposing a systems perspective on business models and their evolution

Divine Innovation: Religion and Service Provision by Religious Organizations in India

This paper examines innovations to religious and non-religious service provision by religious organizations in India. We present a stylized Hotelling-style model in which two religious organizations position themselves at opposite locations to differentiate themselves on the religious spectrum in order to compete to attract adherents. Moreover, the model predicts that economic inequality can make both organizations increase their provision of non-religious services to retain adherents. In order to test our propositions, we present unique primary survey data on the economics of religion that we have collected from 2006-2008 on 568 Hindu, Muslim, Christian, Sikh and Jain religious organizations spread across seven Indian states. We use these data to provide qualitative and descriptive statistics from the survey that is consistent and provides initial support for our propositions. We show that these organizations have substantially increased their provision of religious and non-religious services, but that there are significant variations by religion. We also provide quantitative evidence based on econometric testing to highlight that Indian religious organizations are maximizing the differences in their ideology with respect to other organizations, and are also providing higher education and health services as economic inequality increases in India