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Subgame perfection and the ethics of competition

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  • Daniel G. Arce M

    (Rhodes College, 2000 North Parkway, Memphis, TN 38112, USA)

Abstract

This paper integrates economics and business ethics through the use of the subgame perfection|backward induction decision rule. It is shown that textbook examples of subgame perfection differ in their ethical complexity. Specifically, predatory pricing is difficult to justify on both game-theoretic and ethical grounds, whereas 'poison pill' takeover defenses have complex economic and ethical ramifications. Further, I employ backward induction to examine two additional areas of ethics and management decision-making: product recall (the Ford Explorer and Firestone tires), and price versus advertising competition. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Daniel G. Arce M, 2005. "Subgame perfection and the ethics of competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 397-405.
    • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:6:p:397-405
    DOI: 10.1002/mde.1239
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    References listed on IDEAS

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    1. G. Daniel & M. Arce & Todd Sandler, 2005. "The Dilemma of the Prisoners’ Dilemmas," Kyklos, Wiley Blackwell, vol. 58(1), pages 3-24, February.
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    Cited by:

    1. Daniel G. Arce & Walter Enders & Gary A. Hoover, 2008. "Plagiarism And Its Impact On The Economics Profession," Bulletin of Economic Research, Wiley Blackwell, vol. 60(3), pages 231-243, July.

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