Lessons Learned

• Fear only credible threats. Trust only credible promises.

• Being perceived as irrational can be advantageous.

• Worry about your own payoff, not your opponent’s. Since profit maximization is the objective of business, you shouldn’t fret about making more money than your rival.

• Unless you have a time machine, you should ignore sunk costs and not let them influence your moves because nothing you do in the future will save you from having paid the sunk costs in the past. The proverb, “It is no use crying over spilt milk,” illustrates this lesson.

• Lowering your prices to deter potential competitors is an ineffective tactic because prices can be changed so easily.