9781118041581

Index 761

maximization, 94–95

price elasticity and, 91–94

revenue function, 35

Revised probabilities, 547–551

Risk

assessment of, 468–470

Challengerdisaster and, 557–559

decision making and, 8

risk-benefit analysis, 589

risk neutral, 519

risk premium, 627

sharing of, 638

Risk aversion, 519–530, 637–639

coin gamble and, 519–520

expected utility and, 522–530

insurance demand and, 520–521

Microsoft risk management,

521–522

wildcatting and, 522–530

Rite-Aid, 452

Root mean squared error

(RMSE), 165

Rules, competitive situations and, 399

Ryanair, 360

S

Sales force allocation, 190, 215–217

Sales maximization, 14

Sample bias, surveys and, 130

Sample variance, 134

Samsung, 411, 414

Sanofi-Aventis SA, 630–631, 656–657

Sarbanes-Oxley Act, 615

Satisficing, 13

Scale, returns to, 247–252

Schelling, Thomas, 648

School busing problem, 734–737

Schultze, Charles, 3–4

Scope, economies of, 252–253

Sealed-bid auctions, 677–681, 687

Seasonal variations, time-series

models and, 151

Second-degree price discrimination,

102–103

Second-price auction, 674–675

Self-selection, 583

Self-serving bias, 653

Sensitivity analysis, 48–53

decision making and, 12

exchange rates and, 51

increased demand and, 50–51

increased material costs and, 50

increased overhead and, 50

linear programming and, 718–721

Sequential competition, 417–422

Sequential decisions, 511–519

Sequential game, 417

Serial correlation, 150

Settlement negotiations, 637

Shadow prices, 721–725

Shareholder empowerment, 612

Sherman Act of 1890, 449–450

Shifting demands, demand curve

and, 80–82

Shopping mall location, 28–30

Short-run costs, 278–279

average fixed costs, 242

average total cost, 239, 240–241

average variable cost, 239, 242

fixed costs, 239

marginal cost, 239–241

production and, 237–242

variable costs, 239

vs.long-run costs, 243–244

Short-run production, 192–196

Shut-down rule, 257–259

Signaling, 585–587

Simon, Julian, 283

Simple regression, spreadsheets and,

182–184

Simultaneity, 147–148

Simultaneous search, 563–566

Single product, profit maximization

and, 255–257

Smith, Adam, 295, 611

Smoking health risks, 549–550

Social innovations, 18

Social responsibility, 14

Sony Corporation, 411, 466

Sotheby’s, 453

Specialization of labor, 194

Spreadsheets

optimization using, 73–76

regression using, 182–186

Staffing problem, 730–733

Standard deviation, 135

Standard error of a coefficient, 144

Standard error of the regression, 146

Standard Oil, 450

Statistical tables, 187–189

Steel production, 51

Stock market, economy and, 541

Stock repurchases, 671–672

Strategic commitments, oligopoly

and, 376–378

Strategic complements, 376

Strategic entry barrier, 421

Strategic price cuts, 375

Strategic substitutes, 376

Subjective notion of probability, 501

Subprime mortgage crisis, 467

Substitute availability, price elasticity

and, 87–88

Substitute good, 82–83

Substitution principle, 525

Sun Microsystems, 596

Sunk costs, 232–234

Supply and demand

basics of, 285–289

demand curve, 285

equilibrium price, 285

shifts in, 149, 287–289

supply curve, 285

Supply curves, 285, 290–292

Surprises, predictable, 517

Surveys

consumer, 129–131

cost and, 130

response accuracy and, 130

response bias and, 130

sample bias and, 130

Switching costs, 323

Symmetric firms, oligopoly and,

363–366

T

T-Mobile, 453

t-statistic, 144–145

Taking the outside view, 518

Tariffs, 306–309

Team coordination, 599–600

Telecommunications monopoly,

334–336

Television ratings game, 402–405

Tender offers, 410–411, 651–652

Texaco, 654–656

The Tonight Show,5–6, 642–645

Theory of the firm, 13

Third-degree price discrimination, 102

Ticketmaster, 452

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