Asymmetric Conflicts with Endogenous Dimensionality

This article examines a two-stage model of asymmetric conflict based on the classic Colonel Blotto game in which players have, in the first stage, the ability to increase the number of battlefields contested. It thereby endogenizes the “dimensionality” of conflict. In equilibrium, if the asymmetry in the players’ resource endowments exceeds a threshold, the weak player chooses to add battlefields, while the strong player never does. Adding battlefields spreads the strong player’s forces more thinly, increasing the incidence of favorable strategic mismatches for the weak player.Asymmetric Conflict, Multi-battle Conflict, Colonel Blotto Game, Stochastic Guerilla Warfare, Endogenous Dimensionality

Think twice: harnessing the power of counterintuition

No matter your field, industry, or specialty, as a leader you make a series of crucial decisions every single day. And the harsh truth is that the majority of decisions-no matter how good the intentions behind them-are mismanaged, resulting in a huge toll on organizations, the people they employ, and even the people they serve. So why is it so hard to make sound decisions? In Think Twice, now in paperback, Michael Mauboussin argues that we often fall victim to simplified mental routines that prevent us from coping with the complex realities inherent in important judgment calls. Yet these cognitive errors are preventable. In this engaging book, Mauboussin shows us how to recognize and avoid common mental missteps. These include misunderstanding cause-and-effect linkages, not considering enough alternative possibilities in making a decision, and relying too much on experts. Through vivid stories, the author presents memorable rules for avoiding each error and explains how to recognize when you should "think twice"-questioning your reasoning and adopting decision-making strategies that are far more effective, even if they seem counterintuitive. Armed with this awareness, you'll soon begin making sounder judgment calls that benefit (rather than hurt) your organization

REVISITING MARKET EFFICIENCY: THE STOCK MARKET AS A COMPLEX ADAPTIVE SYSTEM

Well-functioning financial markets are key to efficient resource allocation in a capitalist economy. While many managers express reservations about the accuracy of stock prices, most academics and practitioners agree that markets are efficient by some reasonable operational criterion. But if standard capital markets theory provides reasonably good predictions under "normal" circumstances, researchers have also discovered a number of "anomalies"-cases where the empirical data appear sharply at odds with the theory. Most notable are the occasional bursts of extreme stock price volatility (including the recent boom-and-bust cycle in the NASDAQ) and the limited success of the Capital Asset Pricing Model in accounting for the actual risk-return behavior of stocks. 2002 Morgan Stanley.

Surge in the Urge to Merge: M&A Trends and Analysis

If history is any guide, we may be at the front end of another mergers and acquisition (M&A) wave. M&A activity tends to follow the stock market with a modest lag. The strong rally in equities off the March 2009 lows, combined with improved credit conditions, solid nonfinancial corporate balance sheets, and the presence of companies seeking to enhance their strategic positions, all point to more deals. Copyright Copyright (c) 2010 Morgan Stanley.

Asymmetric Conflicts with Endogenous Dimensionality

This article examines a two-stage model of asymmetric conflict based on the classic Colonel Blotto game in which players have, in the first stage, the ability to increase the number of battlefields contested. It thereby endogenizes the dimensionality of conflict. In equilibrium, if the asymmetry in the players\u27 resource endowments exceeds a threshold, the weak player chooses to add battlefields, while the strong player never does. Adding battlefields spreads the strong player\u27s forces more thinly, increasing the incidence of favorable strategic mismatches for the weak player