Game Theory and Its Business Applications

Abstract

The purpose of this paper is to make a literature survey of the concept and methodology of Game Theory and its business applications. This writer does not intend to discuss the mathematical development of the theories and techniques of Game Theory, for they are better left to mathematicians. Nevertheless, techniques developed by the mathematicians could be of valuable use to businessmen in their decision making process. | While there are limited applications of Game Theory to business situations today, perhaps its greatest contribution so far has been an intangible one: the general orientation given to businessmen who are faced with overcomplex problems. Even though these problems are not strictly solvable in the game theory sense—certainly at this moment and probably for the indefinite future—it helps to have a framework in which to work on them. The concept of strategy, the distinctions among players, the notion of matrix representations of the payoffs, the concepts of pure and mixed strategies, and so on give valuable orientation to businessmen who must think about complicated conflict situations.