63 pages 2 hours read

Avinash K. Dixit

Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life

Nonfiction | Book | Adult | Published in 1991

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Index of Terms

Brinkmanship

Brinkmanship is “the strategy of taking your opponent to the brink of disaster, and compelling him to pull back” (205). A common example is the Cuban Missile Crisis of 1962, when US president Kennedy ordered a blockade of Russian ships heading to Cuba with offensive nuclear missiles, which brought the world to the edge of annihilation. Soviet premier Khrushchev backed down and pulled the missiles from Cuba if the US dismantled its offensive missiles in Turkey near the Russian border. Brinkmanship works best by increasing threats a little at a time instead of all at once. The biggest risk of this tactic is that the game can slip out of control and slide toward disaster, but this danger also is why brinkmanship works. 

Decision Tree

See “Tree Diagram.”

Dominant Strategy

A dominant strategy is “one course of action that outperforms all others no matter what the other players do” (59). A dominant strategy, then, is at least as good as, and often better than, all other plans. When players arrive at such a strategy, their calculations simplify: They follow the dominant strategy in every such situation. A dominant strategy is not the one that dominates other players but the one that dominates all choices for a given player.