Theory Logs

A Summary of the Game Theory by Alyssa Maac

           Our society is composed of individuals who compete, coordinate and communicate with each other. As the concept of survival of the fittest suggest, each of us need to adapt and play by the rules of the game of life in order to survive. The concept wherein it considers society as a strategic game played by individuals is called Game Theory. Game Theory is the study of human conflict and cooperation within a competitive situation. In some respects, game theory is the science of strategy, or at least the optimal decision-making of independent and competing actors in a strategic setting.

The key pioneers of game theory were mathematicians John von Neumann and John Nash, as well as economist Oskar Morgenstern. Game theory is widely regarded as having its origins with the publication of Augustin Cournot's Researches into the Mathematical Principles of the Theory of Wealth in 1838; in which he attempted explain the underlying rules governing the behavior of duopolists. However, it was in 1944 with the publication of John von Neumann and Oskar Morgenstern's The Theory of Games and Economic Behavior that the modern principles of game theory were formulated.  Game theory has been widely applied to the behavior of producers with a few or only one competitor (an oligopoly).

Game theory creates a language and formal structure of analysis for making logical decisions in competitive environments. The term “game” can be misleading. The concept of “game” simply means any interactive situation in which independent actors share, more-or-less, the same formal rules and consequences (although game theory also applies to recreational games).

All the games have the following: (1) Rules, which govern conduct, attitude and behavior of the players; (2) Pay-offs, such as win, lose or draw; (3) Strategies, that influences and predicts the decision making process.

The formal application of game theory requires knowledge of the following details: the identity of independent actors, their preferences, their knowledge, their possible valid strategic acts, and how their decision influences the outcome of the game. Various other requirements or assumptions may be necessary depending on the model. Finally, each independent actor is assumed to be rational.

In applying game theory to the behavior of firms, they face a number of strategic choices that govern their ability to achieve a desired pay-off, including: (1) Decisions on price and output, such as whether to: raise, lower or hold the price. (2) Decisions on products, whether to: keep the existing products or develop new ones. (3) Decisions on promoting products, whether to: spend more on advertising, spend less or keep the spending constant. From these strategy choices, firms could derive a range of possible pay-offs, including: (1) more profits for shareholders, (2) greater market share, (3) improved chances of survival, and (4) riddance of a rival or competitor.

There are three types of strategy: maximax, maximin and dominant. (1) A maximax strategy is one where the player attempts to earn the maximum possible benefit available or possible. This means they will prefer the alternative that gives the chance of achieving the best possible outcome – even if a highly unfavorable outcome is possible. This strategy, often referred to as the best of the best is often seen as ‘naive’ and overly optimistic strategy, because it assumes a highly favorable environment for decision making. (2) A maximin strategy is where a player chooses the best of the worst pay-off. This is commonly chosen when a player cannot rely on the other party to keep any agreement that has been made - for example, to deny. Take a group of prisoners as an example, the judge offers them one year of imprisonment if they confess but 3 years if none of them confessed and the worst, 10 years of imprisonment if they you denied it but they all pinpointed to you - therefore the best of the worst is to confess. (3) A dominant strategy is the best outcome irrespective of what the other player chooses, in the case of the prisoners, it is for each player to confess - both the optimistic maximax and pessimistic maximin lead to the same decision being taken. In general, game theory suggests that firms are unlikely to trust each other, even if they collude and come to an agreement such as raising price together.

Game Theory provides many insights into the behavior of an oligopolist. For example, it indicates that generating rules for behavior may take some of the risks out of competition, such as: (1) Employing a simple cost-plus pricing method which is shared by all participants. This would work well in situations where oligopolists share similar or identical costs, such as with petrol retailing. (2) Implicitly agreeing a 'price leader' with other firms as followers. A big firm may lead and raise price, with another firm passively following suit. (3) Supermarkets implicitly agreeing some lines where price cutting will take place, such as bread or baked beans, but keeping price constant for most lines. (4) Finally, generally keeping prices stable to avoid price retaliation.

Suppose executives in charge of Apple iOS and Google Android are deciding whether or not to collude and exert duopolistic power over the market for smartphone operating software. Each firm knows that if they work together and do not cheat each other, they will be able to restrict output and raise prices, thereby enjoying above-normal profits.

A great example of the game theory is the intense competition between Apple and Windows. There are a lot of computer and gadget brands out there but they are the most popular choices. People who buy their products consider a lot of things before they purchase: the price, the benefit, the function, the durability, the performance and the quality. Some people let the price suffer in exchange of durability, performance and quality. Others consider the price before the performance and quality. However, there are people who choose all of the aspects and choose the product that at least have all of these qualities.

Game theory has a wide range of applications, including psychology, biology, war, politics, economics and business. Game theory turned attention away from steady-state equilibrium and toward market process. Every decision-maker must anticipate the reaction of those affected by the decision. In business, this means economic agents must anticipate the reactions of rivals, employees, customers and investors. Despite its many advances, game theory is still a young and developing science. As the game theory suggests, life’s a game, be wise.

Resources:

http://www.investopedia.com/terms/g/gametheory.asp

A Summary of Social Marketing Theory by Alyssa Maac

Before communicating to the society, one must understand the system first. People need to understand people, themselves, to know what process and products to effectively apply and integrate. Thus, studies, theories and principles regarding social communication are made. The theory of mass communication that promotes socially valuable information and socially accepted behaviors is called Social Marketing Theory. It tries to integrate marketing ideas, principles, tools, techniques and socially beneficial concepts to promote communication and to benefit society.

The theory was first proposed by Philip Kotler and Gerald Zaltman. The theory emerged in the 1970s when marketing techniques were realized to sell ideas, attitudes and behaviors rather than products. It also includes the concept of “Edutainment” (Education and Entertainment). The theory is now being used by social and welfare organizations including companies, agencies and such. Social marketing is not social media marketing.

Social marketing theory is a collection of theories that focus on how socially valuable information can be promoted. It is focused on the society; they are the environment wherein the information needs to consider. This theory has been used by social and welfare organizations to help promote or discourage various behaviors. The theory is administrative in nature in such that it seeks to outline a framework that can be used to design, implement and evaluate information campaigns. The target audience is identified based on their information needs. Once this is done, information is packaged and distributed in a manner that will be easily accessible to the intended audience.

The theory is an attempt to clearly understand how societal and psychological factors work to successfully manipulate the people; in order to increase the effectiveness of mass media information campaigns. The theory focuses on helping identify the various social and psychological barriers that hinder the flow of information through the mass media and offers ideas and ways to overcome these barriers. These strategies range from being indigenous and domestic to the use of mass media or saturation advertising.

This theory is helpful in planning, designing, implementing and evaluating social campaigns with information sharing as its major objective. It uses creativity, rather than depending on public service announcements, for giving out information. Information is packaged and distributed following a plan so that maximum sharing and outcome is possible at the same time. It increases acceptability, response and practice of any social idea for the target group. Social intervention is the main objective of social marketing.

There are two types of social marketing: Operational social marketing and strategic social marketing. Operational social marketing is used to change behavior, whereas strategic social marketing is used to form new policies and development strategies.

There are 4 major components of social marketing which is also used as techniques known as 4 Ps of Social Marketing. They are: (1) Product - target population is encouraged to buy or use socially needed products. A continuum of products exists, ranging from tangible, physical products, to services practices and finally, more intangible ideas. Sustainable products which benefit the society are the goal of social marketing. In order to have a viable product, people must first perceive that they have a genuine problem, and that the product they are offering is a good solution for that problem. The role of research here is to discover the consumers' perceptions of the problem and the product, and to determine how important they feel it is to take action against the problem. (2) Price - price in social marketing can be monetary or non-monetary. It refers to what the consumer must do in order to obtain the social marketing product. Monetary price is the price to buy the product which might help the population. Non-monetary price is the psychological and social costs like changing a habit, time or effort. If the product is priced too low, or provided free of charge, the consumer may perceive it as being low in quality. On the other hand, if the price is too high, some will not be able to afford it. Social marketers must balance these considerations, and often end up charging at least a nominal fee to increase quality perceptions and to confer a sense of "dignity" to the transaction. These perceptions can be determined through research, and can be used in positioning the product. (3) Place - the place is where the target population in need can be found. It is the product distribution site, where the implemented changes will take place or the place where the product is available. The campaign is successful if the place is easily accessible. For a tangible product, this refers to the distribution system--including the warehouse, trucks, sales force, retail outlets, or places where it is given out for free. For an intangible product, place is less clear-cut, but refers to decisions about the channels through which consumers are reached with information or training. This may include doctors' offices, shopping malls, mass media vehicles or in-home demonstrations. Another element of place is deciding how to ensure accessibility and quality of the service delivery. By determining the activities, habits and experiences of the target audience, researchers can pinpoint the most ideal means of distribution for the offering. (4) Promotion - it is the way in which the information is provided for the promotion of the product or habit. The focus is on creating and sustaining demand for the product. The tools and techniques used to make it effective are many; including advertisements, charts, documentaries, etc. along with public relations, media advocacy, entertainment, etc. It takes creativity to promote in a better way. Research is crucial to determine the most effective and efficient ways to reach the target audience and increase demand. The primary research findings can also be used to gain publicity for the program at media events and in news stories.

There are other components of social marketing. Positioning is not sometimes taken as a component of social marketing but is used as a technique. It is an image of anything that is created by the campaign. It is the socio-psychological aspect of the product which is promoted with consumer needs, empirical evidences and objective setting. Public is the target audience as well as other stakeholders. Partnership between different similar agencies or the community also helps in social marketing. Similarly, change does not happen unless there are changes in the policy and administrative. Another component is the funds that are needed to conduct the whole process of social marketing.

There are major features of Social Marketing Theory: (1) Target audience analysis and segmentation; the first step to social marketing is identifying the target population. They are in most need of particular product or awareness and must be analyzed first to have a social change. The audience is analyzed in preproduction as well as production phase. A group also has various subgroups that must also be analyzed by breaking them down which is known as audience segmentation. Existing community agencies must be used. (2) Creates awareness; though the theory is not effective sometimes to change behavior patterns of people, at least they provide awareness. People get to know the alternatives that they can adopt so that they can benefit in the future. When different channels are used to create awareness, people would know new things. Awareness is the first step to change. (3) Increase interest by Edutainment - the message in social marketing is creative and interesting so it is not forgotten easily. The message is reinforced repeatedly and the message is taken as credible by the target group. Education and entertainment is provided as a package. People pay attention as well as get informed at the same time. For example, a street drama is not easily forgotten. Images are used to increase interest and get attention. (4) Desired result - the information should be so interesting and unforgettable, that people would not take the social marketing process to be a learning process but as an entertainment. When this kind of information reaches the intended target group, desired outcome is achieved as the message gets implanted in the brain of the audience.

A great example wherein the concept of Social Marketing Theory is applied, are the health campaigns like family planning. They promote tangible things like contraceptives and non-tangible concepts like family planning, at the same time. They used a society-centered perspective in promoting. For example, they use situational commercials wherein a family that didn’t use these products or didn’t had any family plans ended up getting a lot of children thus, they had a hard time in keeping up with life. It seems as an entertainment drama on television but it actually represents real life situations. It encourages some people to do family planning and use the products and it changes their behavior, choice and lifestyle.

There are also criticisms on Social Marketing Theory: Commercial marketing is sometimes done in the manner of social marketing. Since this theory focuses on creativity, it can sometimes cause problems as the audiences have to interpret the message themselves and the message might not be very assertive. Finally, social marketing theory is not taken as a proper mass communication theory sometimes. Although there are criticisms in this theory, it is possible that this process would be effective today and in the future, especially that processes are now slowly becoming you-centered, individual-centered and society-centered.

Resources:

http://www.social-marketing.com/whatis.html

https://www.businesstopia.net/mass-communication/social-marketing-theory

A Summary of Knowledge Gap Theory by Alyssa Maac

           Many people say that poverty is not a hindrance for education. However, there are salient circumstances wherein it is necessary for money to be involved. Materials, food, resources, transportation; these everyday necessities almost always require spending some money. Thus, even though there are public schools and public news sources, sometimes it is not enough to educate people. The theory that believes that the increase of information in society is not evenly acquired by every member of society: and that people with higher socioeconomic status tend to have better ability to acquire information is called the Knowledge Gap Theory (Weng, S.C. 2000). In this theory, knowledge is treated as any other commodity which is not distributed equally throughout the society and the people at the top of the ladder has more easy access to it.

           This theory was first proposed in 1970 by Philip J. Tichenor (then Associate Professor of Journalism and Mass Communication), George A. Donohue (Professor of Sociology), and Clarice N. Olien (Instructor in Sociology); all of the three researchers in the University of Minnesota. They defined the Knowledge Gap theory, “as the infusion of mass media information into a social system increases, higher socioeconomic status segments tend to acquire this information faster than lower socioeconomic status population segments so that gap in knowledge between the two tends to increase rather than decrease.”  In simple words it means, as the access to mass media increases, those particular segments of population, especially those of the higher class, inevitably gain information faster. Hence, the wide gap increases with the lower economic class of the population. The world is yet to see the complete effect of the new technologies but as the world turns more technological, the expense rises and it goes much more out of the league of the poor. As a result, the knowledge gap also widens and the people of the higher economic class gain the benefits more. If the information services are not made equal for the entire society, this gap of information will increase over the years.

           The knowledge gap can result in an increased gap, in social and literacy context, between people of lower and higher socioeconomic status. The attempt to improve people’s life with information via the mass media might not always work the way it is really planned. Mass media might have the effect of increasing the difference gap between members of social classes. This leads to a division of two groups: a group of better-educated people who know more about most things, and those with low education who know less. Lower socio-economic status (SES) people; (defined partly by educational level) have little or no knowledge about public affairs issues. They are also disconnected from news events and important new discoveries, and usually aren’t concerned about their lack of knowledge.

           Tichenor, Donohue and Olien (1970) present five reasons for justifying the knowledge gap and why these patterns of gap exist: (1) communication skills – people of higher socioeconomic status have better communication skills, education, reading, comprehending and remembering information. As a person receives more education, his communication, reading, and understanding skills increases. Hence; gathering information and understanding the issues of various spheres becomes easier and better for him. (2) Stored information – people of higher socioeconomic status can store information more easily (via classrooms, textbooks, discussions). An educated person is also exposed to much more topics than a less educated person and hence his awareness is more. (3) Relevant social contact – a person with more education has more relevant social integration. This helps him to encounter various perspectives and diverse stories that make his understanding of public issues better. (4) Selective exposure – people of higher socioeconomic status are better in selective exposure, acceptance and retention. An educated person knows well the optimum use of a medium; on the other hand, a person with no knowledge is unlikely to know it. Hence, he will be less interested and less aware of the issues around the world, and he may not also know of how it may affect him. (5) Media target markets – the nature of the mass media itself is that, it is geared toward persons of higher socioeconomic status. For every product, news or any commodity; a certain segment is targeted and it is usually the higher strata of the society, hence, the lower strata remain unaware.

           After surveying on local and national issues by the end of 1975, George A. Donohue and his other colleagues came up with three variables which would help to reduce the gap and might fail this theory up to a certain extent. (1) Impact of local issues – it was seen that local issues, that directly impacted the people, had aroused more of social concern than national issues that did not have such a great impact; hence, in these local issues, widened gap could be reduced. (2) Level of social conflict surrounding the issue – until a communication breakdown, issues with more perceived conflict tends to grab more attention; thus, weakening the knowledge gap hypothesis. (3) Homogeneity of the community – if it is a homogeneous community, the gap tends to be lesser than a wider heterogeneous community.

The knowledge gap can be used to describe presidential campaigns. The knowledge gap hypothesis holds that, when new information enters a social system via a mass media campaign, it is likely to aggravate underlying inequalities in previously held information. However, the results of the analysis show that knowledge gaps do not always grow over the course of presidential campaigns and that some events, such as debates, may actually reduce the level of information inequality in the electorate.

The knowledge gap is evident in our society. There are a lot of lower socioeconomic people in our country and most of them are oblivious in what is happening with the extra-judicial killings in our country. It is quite hard for them to know for this type of explanation can’t be found on common books and internet sources. Also, they are not aware of the process one must go through in a court before being imprisoned. Consequently, many people run away from police whenever they try to arrest them down and it eventually leads to killing.

Media presenting information should realize that people of higher socioeconomic status get their information in a different way than lower educated people. Furthermore, this hypothesis might help in understanding the increased gap between people of higher socioeconomic status and people of lower socioeconomic status. It can be used in finally approaching new ways of communication so that real equality can be achieved.

Resources:

http://communicationtheory.org/knowledge-gap-theory/

https://www.utwente.nl/cw/theorieenoverzicht/Theory%20Clusters/Media,%20Culture%20and%20Society/knowledge_gap/

http://www.slideshare.net/SaimaSam/knowledge-gap-theory