Strategic Concepts Vocabulary

the benefit gained by being the initial actor in a market or game

“Amazon's first-mover advantage in e-commerce proved decisive.”

Origin: From first + mover + advantage

a mechanism that binds one to a future course of action

“Burning bridges is a commitment device signaling no retreat.”

Origin: From commit (Latin committere `to unite`) + device

actions taken to convey information about oneself to others

“A college degree serves as signaling of ability to employers.”

Origin: From signal (Latin signalis), from signum `mark`

actions by the uninformed party to induce information revelation

“Insurance deductibles are a screening mechanism.”

Origin: From screen, originally meaning to sift or filter

increased risk-taking by someone protected from consequences

“Bailout expectations create moral hazard in banking.”

Origin: From moral + hazard (Arabic az-zahr `the dice`)

the tendency for higher-risk individuals to seek insurance

“Adverse selection can cause insurance markets to collapse.”

Origin: From adverse (Latin adversus `turned against`) + selection

a threat that is believable because carrying it out is rational

“MAD made nuclear threats credible during the Cold War.”

Origin: From credible (Latin credibilis `worthy of belief`) + threat

pushing a dangerous situation to the edge to force concessions

“The negotiator's brinkmanship nearly collapsed the deal.”

Origin: From brink + -manship, coined by Adlai Stevenson (1956)

a solution people converge on without communication

“Grand Central Station is a Schelling point for meeting in NYC.”

Origin: Named after Thomas Schelling, American economist (1921-2016)

a strategy of cooperating first, then mirroring opponent's previous move

“Tit for tat won Axelrod's iterated prisoner's dilemma tournament.”

Origin: From tip for tap, equivalent retaliation