Dixit and Nalebuff: strategic thinkers.

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

Avinash K. Dixit and Barry J Nalebuff.

New York: W. W. Norton, 1993. x+393 pp., cases, index. ISBN 0-393-31035-3 (trade paper).

As the title of the book by Dixit and Nalebuff suggests,

strategic thinking gives a competitive edge in all aspects of one's life. From business to personal realms, one must employ certain tactics not only to survive but also to succeed and triumph in situations that warrant life's trophies and accomplishments. Dixit and Nalebuff have teamed to produce a manual by which most could live, but which more so should be kept a secret from the masses, its strategy kept by select readers to ensure their best advantages.

Avinash K. Dixit and Barry J. Nalebuff are professors at Princeton and Yale School respectively. They offer exacting advice to the reader using down-to-earth language and storytelling to describe thoroughly the situations and actions they recommend when the reader faces similar opportunities. Their main goal is to "improve your strategy 1.Q." (p. 2); therefore much of their work seems a coaching effort, involving playing and replaying moves and techniques to prepare their readers/players for the field of Life.

Examples in the book come from varied situation in movies, sports, literature, and even catastrophic events such as nuclear conflicts. Chapter One begins with the basics, the "Ten Tales of Strategy," giving a rundown on step-by-step general practices effective for any occasion. The suggestion is that winning is all that matters and can best be accomplished by following an effective leader, who may not be the official leader but a leader who has set a better example. Dixit and Nalebuff describe the 1983 America's Cup finals sailboat race where the leader could have followed the actions of the pursuer and kept the advantage. As it turned out, because the crew was determined to keep its lead without looking back or anticipating the actions of a close rival, the original frontrunner lost a critical run in the series, giving Up the Cup to the opponent.

Further examination of this strategy comes in Chapter Three--"Seeing Through Your Rival's Strategy.'" This chapter explains how Game Theory can be useful to managers much like Sherlock Holmes pitted Professor Moriarty. Can Game Theory be so elementary? Yes, and Dixit and Nalebuff comprehensively describe dominant, dominated, and equilibrium strategies. An example of dominant strategy is Indiana Jones' situation in Indiana Jones and the Last Crusade, where Indiana Jones should have wasted no time in expediting the water in the Holy Grail to his dying father. Instead, he chose to test it on himself. The authors clarify that Indiana Jones had already made his one and final choice. The dominant strategy would have been for Indiana Jones to give the water in the grail directly to his father. The consequences of the bad decision could have resulted in the death of both the father and Indiana Indiana had Indiana Jones chosen the incorrect grail.

Another provocative chapter is Chapter 7, on unpredictability. A strategy exists in being unpredictable, and, in turn, preparation for an unpredictable action by an opponent or rival can prove to be most beneficial. Acting in an unpredictable manner--or, rather, acting randomly--is a potentially successful course of strategy. Using a pitcher's needs, which are to be very indiscriminate in pitches, the authors suggest a list of random numbers or even for the pitcher to look at the wristwatch before a pitch. Here the pitcher would throw a fast ball if the second hand was on an even number, but a fork ball on an odd number. The advice couldn't be more clever or on the ball, one could say.

President John Fitzgerald Kennedy's successful application of "brinkmanship" during the Cuban missile crisis in 1962 exemplifies the need to push the enemy to the brink only to persuade the enemy to pull away. Brinkmanship, as Dixit and Nalebuff explain, is "the deliberate creation of risk," and this risk "should be sufficiently intolerable to your opponent to induce him to eliminate the risk by following your wishes (p. 206)." Dixit and Nalebuff describe brinkmanship as an exceptional type of risk with particular features that must be understood before putting this strategy into play.

The final chapter, titled "Incentives," recommends the supposed best ways in rewarding work effort--organizing joint ventures and then further exploring the strategy of auctions. The natural incentive of a market economy is the profit motive, but even this plan of action can often be erroneous. To heighten the thrill or suspense, the addition of another firm to the mix creates a new environment and breeding ground for innovative incentives and their purpose in the relationship.

Throughout the book, Dixit and Nalebuff have harvested case studies from all walks of life. Reading like tactical Aesop's fables or Grimm Brothers' Tales, these case studies prove to be lessons in life--what to do and what not to do. "The Last Shall Be First" case study analyzes the government's ambition to register teenagers for the military draft. Then there is the comical, albeit poignant, "Three-Way Duel" between Curly, Larry, and Moe (the Three Stooges). Subsequently, a case called "The King Lear Problem" considers the case of children and the quotas they must meet to gain the ultimate prize: inheritance. Each of the cases proves to be a terrific learning tool that can easily be retained in the memory of those who are not accustomed to, or who are novices at, thinking in a precise strategic manner.

During the 2002 Oscar run, the biographical depiction of John Nash, "A Beautiful Mind." captured the attention of the public for his Nobel Prize winning work on Game Theory. For liberal arts students and others not enrolled in business, Game Theory had been an unknown philosophy. Dixit and Nalebuff bring the theory and strategy across the goal line, into the cage. Dixit and Nalebuff have achieved a sweeping work recommended for all readers in preparation for life's situations and business' most difficult battles, big and small.

Ivy L. McClatchy Tanvishut, 1510 Thirteenth Avenue, Franklinton, LA 70438-2306, USA, ivytanvishut@hotmail.com.

Ivy L. McClatchy Tanvishut holds a B.A. in English with minors in creative writing and history as well as an MBA from Southeastern Louisiana University. Hammond. She has served as Chief Lab Assistant in the University's Internet Resource Center. In addition to her native English. she is a student of Thai.