Game theory helps in finding out the best course of action for a firm in view of the anticipated countermoves from the competing organizations.
Assumptions
for a Competitive Game
Game theory helps in finding out
the best course of action for a firm in view of the anticipated countermoves
from the competing organizations. A competitive situation is a competitive game
if the following properties hold:
The
number of competitors is finite, say N.
A finite set of possible courses
of action is available to each of the N competitors.
A play of the game results when
each competitor selects a course of action from the set of courses available to
him. In game theory we make an important assumption that al the players select
their courses of action simultaneously. As a result, no competitor will be in a
position to know the choices of his competitors.
The outcome of a play consists of
the particular courses of action chosen by the individual players. Each outcome
leads to a set of payments, one to each player, which may be either positive,
or negative, or zero.
Tags : Operations Management - Game Theory, Goal Programming & Queuing Theory
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