General Electric Power Unit Faces ‘Prisoner’s Dilemma’ as Prospects Dim
General Electric Co. (GE) is a extremely successful US company that produces almost anything (from lightbulbs to airplanes to renewable energy). However recently (June 26 2018), GE was removed from the Dow Jones as a result of their underperformance in revenues and the decrease in their stock prices. The article specifically discusses how GE’s Power unit faces a prisoner’s dilemma on how they should proceed in the future. GE’s Power unit has been decreasing in revenue due to increased competition and lower demand for energy infrastructure (ie. windmills, etc). According to the article, GE can either leave the power business entirely or reduce prices while staying in the power business. GE Power has already cut 12,000 jobs in an effort to reduce costs. However, ultimately, GE Power will need to make a decision on how to move forward in the company.
This article is related to the Prisoner’s Dilemma Game that was taught in class. The two players of the game would be GE and the Wall Street investors. The strategies for GE were said in the article: either leave power business or reduce price to stay in it. The two potential strategies of the investors are to keep investing into GE which could lose more money or to stop investing at all. As we learned from class, there is a dominant strategy to the prisoner’s dilemma. This means that there is a best response strategy for GE and investors, and the strategy results best outcomes for each other.
Article:https://www.thestreet.com/markets/general-electric-faces-prisoner-s-dilemma-with-power-unit-14696069
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