Critical Thinking and Managerial Decision Making



Week 7 - Lecture


Important points about the course, your progress

Introduction to the Game theory

Methods of attacking the argument

Moral values versus factual statements

Practices for your debate



Assessments 2 &3

Reflective essay in progress?

Group finalised for your debate?

Enrolled on Moodle using the ID assigned?

Team charter in progress?



Introduction to game theory

John Neumann and Oskar Morgenstern – Theory of Games and Economic Behavior (1944)

Understand the behaviour of players (actors) in situations where fortunes are interdependent

Rule-based games and free-wheeling games (cannot take away more than you bring)

Not about being egocentric. Focus is on others

Often more about win-win than win-lose situations or both or coopetition

Win-lose often destructive – price wars good example

A good way to think of value creation and value appropriation (capture)


Game Theory: The Science of Decision-Making


Competitive game: Every player has something to gain by stabbing the other player in the back Cooperative game: every player has agreed to work together toward a common goal
When you are competing with others, it makes sense to choose the course of action that benefits you the most no matter what everyone else decides to do. 1. The contribution of each player is determined by what is gained or lost by removing them from the game. This is called their marginal contribution.
2. Interchangeable players have equal value.
3. Dummy players have zero value.
4. If a game has multiple parts, cost or payment should be decomposed across those parts.


Video analyses

Three videos on Moodle that are about game theory.

What were they about again?

Dilbert and the prisoner’s dilemma

13 Days in October – Cuban Missile Crisis, also read Game theory and the Cuban missile crisis (https ://

A Beautiful Mind – the principles of cooperative game theory


The right game

Brandenburger and Nalebuff argue competitors need not fail for the firm to be successful

Can think of competition and cooperation in game terms

the challenge is to identify what game should be played and its parameters

Identify when cooperating and when competing along the vertical and horizontal dimensions

Eg. Can play by creating competition (“pay me to play”) – already known in takeovers, get paid to change the nature of the game, parameters of takeover

Eg. Cheap complements and creating competition in substitutor market


The model illustrates the interdependencies between yourself and the four other types of player in your business:

Customers – The people who buy your product or service.

Suppliers – These provide your organization with the resources you need to produce a saleable product. (Keep in mind that suppliers can be outside organizations, or your own employees.)

Competitors – Competitors take a share of your target market by offering a similar product or service.

Complementors – These are other players who provide a product or service that can be linked to your own to make both offerings more attractive to your customers.


The right game (continued)

Concept of PARTS


Customers, competitors, substitutors, complementors


What each brings to the game


Nature of the rules and structures that shape behavior


Moves to influence perception and behaviors of other players (can be positive or negative)


Boundaries of the game (interactions) as perceived by the players


The right game (continued)

Changing the added values

Eg. rows of more leg room in plan by Trans World Airlines

Imitation led to reduction in excess capacity, better prices and/or less empty seats

Eg. create dependency on your product (Nintendo example)

Capture value by doing things like pre-ordering (massive soap pumps order)

No guarantee that the added value will be captured

Changing the rules

Eg. rules of pricing followed or focus on niche to stay out of way of big players or rule that incumbent supplier makes the final bid price


The right game (continued)


Eg. Price signalling (Murdoch newspaper price drops)

Another example negotiating over percentage fees (investment banks and major sales)

Changing scope

Eg. create linkages to other games or shrink the game

For instance, can opt not to enter a particular market or serve a particular segment to avoid competition


Strategy and the right game concept

Could be a number of potential mental traps

Convinced cannot change the game

Believing must disadvantage others to win

Believing must always be unique or innovative, imitation can be good

Unable to see the whole game

Failing to methodologically/systematically analyse how possible to change the game – must be “allocentric” and no “egocentric”

Games are often ongoing and have no end


Game theory is useful and may help some people identify how to negotiate or work with potential collaborators

Competition but coopetition also a reality

The right game is useful

Value net framework a useful tool



Week 7 - Workshop


More debating principles/practice



Four ways to attack an argument

Two direct ones and two indirect ones

1. Direct Method: Attack the premises

If you can show that an argument relies on at least one implausible premise, that is a good way of showing that the argument is not good enough.

You might argue that there is simply not enough evidence to show that the premise is true. Burden of proof is passed on to the opponent.

2. Direct Method: Attack the reasoning.

Even if the premises are all very plausible, you need to check whether the reasoning of the argument is acceptable.

The argument might be invalid or inductively weak, or question begging.


3. Indirect method 1: Attack the argument indirectly by attacking the conclusion.

If you can show that the conclusion of an argument is false, this implies that there must be something wrong with the argument. This strategy of refuting an argument is useful when it is difficult to evaluate an argument directly, perhaps because it is too long or convoluted. Of course, this strategy does not really explain what is wrong with the argument.


4. Indirect method 2: Give an analogous argument that is obviously bad.

The idea is to compare the original argument with another argument. If the new argument is obviously bad, and it has the same structure as the original one, then the original one is likely to be a bad argument as well. This is a good strategy to use when it is difficult to see what is wrong with an argument, or your opponent refuses to admit that the argument is no good.


Exercise for class (15 minutes)

Consider this argument:

Capital punishment is wrong because it is always possible to punish an innocent person by mistake.

How would you attack this argument using the four methods mentioned?


Possible answer:

Attack the premises: Is it always possible that an innocent person is executed by mistake? It might be argued that in some crimes there were many independent witnesses. Perhaps the criminal was apprehended right away at the crime scene, and the whole crime was recorded on surveillance video.

There is therefore little doubt that the person being caught is guilty.


Attack the reasoning: Even if mistakes are always possible, this is just one consideration and it does not immediately follow that capital punishment is wrong. Maybe there are many other considerations in support of capital punishment. We need to balance these factors before deciding whether capital punishment is acceptable or not.


Attack the conclusion: Punishment should be proportional to the crime.

Capital punishment is not wrong because this is what justice requires in the case of hideous crimes.


Give an analogous argument that is obviously bad: With imprisonment, it is also possible to punish an innocent person by mistake. But it would be absurd to stop sending people to jail because of this.


More practices on using the four methods of attacking arguments:

a) Cloning animals or human beings is unnatural, so it is wrong and we should not do it.


b) We should not trust scientists because they keep on changing their theories. Today they say that this is true. Tomorrow they come up with a

different theory and say something else.


c) It is useless to punish students because they will always make mistakes.


Thinking about VALUES

Three types of values

Personal values: values accepted by individuals that affect how they evaluate things and make decisions about their lives (e.g., independence > relationships)

Aesthetic values: concern the evaluation of art and literature, and standards for beauty

Moral values: Moral values correspond to objective standards in ethics that are supposed to be universal and apply to everyone. They govern how we should interact with each other, and they determine when something is morally right or wrong (e.g., Slavery is wrong, because freedom is a moral value).


Moral values versus Factual statements

Morality is normative, i.e., that determines what we should do or not to do, what is good or bad.

Factual statements are what the world is actually like.

Something is the case ought to be the case

E.g., gov. officials are corrupt, but they ought not to be.

Everyone is selfish, but selfishness ought not to be desirable.

Children are starved, but they ought not to be.


Implications for moral reasoning

1. whether something is factually true is logically independent of its moral status

E.g., eating babies will make your skin more beautiful.

You might think the idea is disgusting (morally incorrect), but this does not mean the claim is false (factually independent of moral judgement).


Moral reasoning

2. be careful of arguments that use purely descriptive assumptions to derive a normative conclusion (This mistake is known as the naturalistic fallacy), e.g.,

Woman should stay at home and look after children because this has always been part of the social tradition.

Eating meat is fine because we are more intelligent than other animals.

Governments should not provide social welfare because survival of the fittest is just part of nature.


Please bear in mind that:

Factual claims by themselves have no normative implications.


Think about arguments for your debate topic

Are you conflating moral values with factual statements?


o      Ethics and business are not compatible

o      People who are smokers should not be employed

o      People who are working in the same company  should not have romantic relationships with each other

o      CEOs deserve the big salary package that they get…..


Group Exercise

Get into groups and discuss the following three topics:

Reality TV does more harm than good.

Bribery is sometimes acceptable.

University lecturers should not be required to use social networking to help deliver learnings to students.


In your groups, think of one argument for and one argument against each of these topics.

Be prepared to share your ideas with the whole class.


What did we learn?

Game theory?

Defining arguments?

Making compelling arguments?

Methods of attacking arguments?

Use of evidence?


Moral values versus factual statements?