Template-Type: ReDIF-Paper 1.0
Author-Name: Kevin Bryan
Author-Name-First: Kevin
Author-Name-Last: Bryan
Author-Name: Michael Ryall
Author-Name-First: Michael
Author-Name-Last: Ryall
Author-Name: Burkhard C. Schipper
Author-Name-First: Burkhard C.
Author-Name-Last: Schipper
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Value-Capture in the Face of Known and Unknown Unknowns
Abstract: A large theoretical literature on value capture following Brandenburger and Stuart (1996) uses cooperative games under complete information to study how and why firms earn supernormal profits. However, firms often have different information, beliefs, or creative foresight. We extend value capture theory to incomplete information (“known unknowns”) or unawareness (“unknown unknowns”), and illustrate some conceptual issues with that extension. Using the case study of Cirque du Soleil, we show how an entrepreneurial firm can profit even when it does not contribute materially to value creation. In a case study of Apple iTunes, we show how value capture depends quantitatively on the beliefs of other firms.
Length: 56
File-URL: https://repec.dss.ucdavis.edu/files/RKTVYH4bfSZqVsrv9aovVCa8/unawcgames26.pdf
File-Format: application/pdf
Number: 333
Classification-JEL: D21, D83, C71
KeyWords: cooperative games, unawareness, incomplete information, coarse core, business strategy, value-capture theory
Creation-Date: 20190828
Handle: RePEc:cda:wpaper:333