Question

Think back to some interaction that could be described as a game that you or your firm has had with another organization (eg: another firm in your market that sells a product that is perceived as a substitute for your product, a supplier, a customer, a government, etc.), or with another department within your organization. Make sure to identify the type of game (one-shot simultaneous game, repeated simultaneous game, or sequential game), the players, the strategies available, and try to describe the payoffs (a quantitative estimation would be ideal, but a qualitative approximation may suffice –oftentimes, defending that some payoff must be greater than another is enough to assign 'simplified payoffs' and solve the game). Analyze the game and its solution and discuss whether there was any strategic move that could be used to change the game to your advantage.

Answer 1

Game theory is used to analyze strategic interactions between organizations or departments. In one-shot simultaneous games, players make choices simultaneously. Changing the game to your advantage can involve offering unique features or lower prices.

Step-by-step explanation:

Game theory, a branch of mathematics, is used to analyze situations where players must make decisions and receive payoffs based on the actions of other players. In the context of an organization's interaction with another organization or department, game theory can help analyze the strategic choices and potential outcomes.

For example, consider a one-shot simultaneous game between your firm and a competitor. The players are your firm and the competitor. The strategies available could be pricing your product higher or lower than the competitor's. The payoffs can be represented qualitatively, with higher profits resulting from successfully gaining market share.

To change the game to your advantage, you could consider offering a unique feature or lower prices to attract customers away from the competitor.