game theory : backwards induction

a real world example

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In Mid 2000s Apple Launched their first "Get A Mac" commercial.  In the first year the campaign produced 19 ads. After 4 years the campaign included 66 advertisements trying to convince the public to ‘Get- A- Mac’. These 66 commercials included “Mac” played by actor Justin Long and “PC” played by John Hodgman.  In each commercial “Mac” and “PC” have conversations.       ( Image source 'get a Mac campaign'Wikipedia.org )

Why?
Prior to the campaign, Apple’s sales seemed to be slowly decreasing. PC’s still dominated the market and Apple was struggling to convince consumers that their product was better. It wasn’t until Apple saw a survey on the American Consumer Satisfaction Index and realized that Macs were constantly rated higher than PCs in customer satisfaction.
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         (image source geekwire)
        : Retaliation Ad by Microsoft :

  • In 2013, Microsoft fought back at Apple, not on the MAC vs. PC level, but about tablets. The ads were similar to the ones that the Get-A-MAC campaign put out, but instead of the two men representing the products, they had the actual products (IPad and a tablet) banter back and forth through the voice activation systems.

  • Later Microsoft found a real person named Makenzie "Mac" Book to review its Surface Laptop 2. According to Mac Book the surface lasts longer, works faster and includes a touchscreen. Microsoft was pleased to report that Mac Book said to get a surface.  

                                                                              ::  Takeaway Points ::

  1. A subgame perfect equilibrium is an equilibrium in which all actions are Nash equilibria for all subgames.

  2. We can find such equilibria by starting using backward induction, which instructs us to start at the last action and work our way progressively backward from there.

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