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.”

a mechanism that binds one to a future course of action

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

actions taken to convey information about oneself to others

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

actions by the uninformed party to induce information revelation

“Insurance deductibles are a screening mechanism.”

increased risk-taking by someone protected from consequences

“Bailout expectations create moral hazard in banking.”

the tendency for higher-risk individuals to seek insurance

“Adverse selection can cause insurance markets to collapse.”

a threat that is believable because carrying it out is rational

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

pushing a dangerous situation to the edge to force concessions

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

a solution people converge on without communication

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

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

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