Why did I choose this picture? See item #7
Application Portfolio is an assignment in the Strategic Decision Analysis (SDA) class by Professor Patrick Noonan. Among the various subject of the class one will find Game Theory, Bidding, Spatial Pricing, Psychology of Judgment and Decision Making, Distribution Issues and more.
The assignment: Over the duration of the semester, collect a diverse portfolio of applications of the key content of the course. The choice of what “key content” means is up to me. There is no single “right answer” to what it means. For each item I should describe the connection to the class, and how do I interpret the decision or situation according to the class’ material.
Learning objectives: All the research on learning indicates that being able to make connections between in-class lessons and new situations indicates a higher level of learning. This assignment is designed to encourage – and reward – these “linking” activities.
Method used to build the portfolio: Most of my reading is done using Google Reader. I currently have about 120 feeds on it and I utilized it for this project. After the assignment was posted I started to star relevant items and tagged them as SDA. Later I re-visited the tagged items and built connections between them.
Link to class: The psychology of decision making. The first time I have learned about Behavioral Economics was when Prof. Daniel Kahneman and the late Prof. Amos Tversky won the Nobel Prize in Economics in 2002. Their winning was a source of pride in the academic world in Israel and their works published widely. In the interview to Edge.org Prof. Kahneman discuss different subjects including the role of behavioral psychology in voting:
Item 2: Netflix Prize – a competition to improve the suggestions engine offered by Netflix. Back in March I posted Innovation concert by Netflix. The post discussed the innovation aspect of the competition and how it fits to a book I read earlier.
Link to class: I choose this item since it relates to Network & Systems of Decision Makers. Netflix is using the knowledge in the public domain to develop a system which use Netflix own data about its network of customers.
Item 3: Hulu and the following articles that describe it. Wired Magazine: Free Legal and Online, Wired epicenter: Hulu Could Catch YouTube and TechCrunch: Can Hulu Be A Bigger Business The YouTube
Link to class: Zone of Possible Agreement (ZOPA); Game theory – cooperation; Game theory – Changing the game. By launching Hulu, Fox and NBC were changing the game of TV on the web. Up to that point, TV episodes were wither pirated by viewers or offered with many limits by the networks. The new site allows the networks to control the way they offer their product to the audience while building a new revenue stream. The cooperation between two networks is a selection of a new point in the ZOPA.
The latest result of this change in the game between media, Internet users, advertisers and websites was on 11/10/08 when MGM and YouTube published a new deal to post MGM’s full length movies on YouTube.
Item 4: Apple and AT&T changing the game of mobile phones. Wired: The Untold Story: How the iPhone Blew Up the Wireless Industry
Link to class: Cooperation, negotiation and game changing. The agreement between AT&T and Apple to launch the iPhone exclusively on the AT&T network and the control that Apple, as a device manufacturer, has on the process were a unique cooperation in the market of mobile phone. Until that point, the mobile operators (AT&T, Verizon etc.) controlled their networks and defined the requirements for the device manufacturers (Nokia, Motorola etc.). In addition, the operators had high barriers of entries to applications providers for the different phones.
Apple’s iPhone, and its AppStore are the first step to an open platform in the mobile market. Anyone can develop an application to the iPhone through the Apple Developer Connection and offer it on the AppStore.
Google and its Android system are another open platform in the changing market of mobile phones. Google offers its platform to different devices and has a program for developers.
Another result of the exclusive agreement is a new agreement signed by Verizon and Rim to launch the new BlackBerry Storm exclusively on Verizon’s network.
Item 5: I’m Behavioral Economics, I’m a Traditional Economics
(This is a series. After this video, please view the related videos)
Link to class: The psychology of decision making. Duke and MIT’s Prof. Dan Ariely recently published a new book Predictably Irrational in which he discusses different areas of behavioral economics and its implications. Some of the subjects are diets & deserts and buying things we don’t use.
Item 6: and
Link to class: Bidding, ZOPA, Cooperation
On February 1 2008 Microsoft Corp. offered to buy Yahoo! for $44.6 billion in a cash and stock deal. While Yahoo!’s share value was $19.1, Microsoft’s offer represents a value of $31 per share.
The board of Yahoo! did not approve the deal and the company announced that it values its stock in $37.
Yahoo! declared it was working on an optional partnership with Google in the online advertising field.
Since the offer, the value of Yahoo!’s share dropped to as low as $11.66 (December 5, 2008).
The battle between Microsoft, Google and Yahoo included ideas in the area of cooperation, market size and bidding, and I think it is still not over.
Item 7: Disney World and Universal Studios – to buy or not to buy Express Plus?
Link to class: fairness, line cut, paying to eliminate First Come First Serve.
It’s the week of Christmas, you go with your girlfriend a couple of good friends to Disney World and Universal Studios. It’s the first for both of you. As a group you spend too much time in long lines. So long that some of them takes about two hours. And suddenly you see this sign for only (?) you can skip the lines and enjoy all of the attractions faster than all the others.
Should you buy it? Is this a useful tool to have a better time in the park? Is this fair at all that they sell it – what if I don’t have the resources to buy it?
And then, the line advances and you see another line. It’s 30 minutes long. It is the special Express Line. Even when you pay extra you have to wait…
Item 8: Signaling Strategies in Seth Godin’s blog
Link to class: Signaling is an important tool used by players during a game to show their intent and their position in the game/ market. Most of the examples we learned were about players from the same group trying to win share of a pie or reach a point in a ZOPA. This post describe a different game, which marketers play to signal to their customers about the value of their products.
Referring to item #5, I may suggest that the recent popularity of Prof. Ariely’s book in the blogsphere may be part of the signaling efforts to promote his new book. Worked on me.
Item 9: Deep Blue in Chess School
Link to class: Computer models for strategy.Different parts of the class included great Excel models. Some examples are finding the equilibrium of a game with about 100 options for each player using tables’ functions and conditional formatting; simulations of Schelling’s Neighborhood Segregation Model.
One of my favorite strategy game is Chess and over the years I found the process to develop a computer that can win this game fascinating.
Item 10: Free! Why $0 is the future of business (Chris Anderson for Wired).
Link to class: Pricing.
The four model of Free as Chris Anderson discuss them in his book (currently I only had the chance to read the wired article his posts about it) are used in various forms around the business world. If, as Mr. Anderson claims, $0 is the future of business, it may influence some of the models we learned about pricing.