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Essay / Research Paper Abstract
This 3-page paper argues that game theory is not an efficient tool to use when setting price competition in business. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTgamtheor.rtf
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Unformatted sample text from the term paper:
first examine how game theory operates when it comes to business management. Game theory, in its most basic form, is how people
interact with one another (Game Theory, 2009). The concept of game theory is that one "move" or "decision" by an individual or entity will spark an answering response (Game Theory,
2009). This works on the economic sense, in that when a firm in an industry makes a particular pricing decision, it
will spark an answering response from the competition. If, for example, one airline company decides to slash prices in summer fares, others are presumed to follow suit.
There are some huge problems in relying on game theory as the sole study of behavioral model. With game theory, its necessary to make assumptions
(Game Theory, 2009). Its also necessary that the assumption involve people taking whatever actions they need to do to make them happy (Game Theory, 2009). In other words, people will
behave rationally for their own best interests - and will respond to others "game moves" based on those assumptions (Game Theory, 2009).
This is a lovely theory that has absolutely no place in the real world, however. One only has to examine the recent financial meltdown to see how, exactly, game theory
does not work well with markets. In bidding up the markets, most financial institutions didnt necessarily respond to the decision of others, as much as they responded to the needs
of their stockholders in trying to create more wealth. Its true that the entities did act in their own best interests - but once those "best interests" were reached, they
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