Game Theory

The pandemic, despite all the horrors it has brought, has provided some people with more time for self-reflection, majorly people in Business.

Game theory is a mathematical context but very relevant to change the game of business. Von Neumann and Morgenstern published Theory of Games and Economic Behavior, and provided a systematic way of understanding the behavior of players in the game. Business is always a high-stakes game. In Business, you have to look forward far into the game and then reason backward to figure out which of today’s actions will lead you to where you want to end up. The primary insight of game theory is to focus on others i.e., Allocentrism.

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Photo by Leo Cardelli on Pexels.com

So what are the elements of the game? In game theory, there are two kinds of solutions – Pure Strategy Solution and Mixed Strategy Solution and five elements shortly called as PARTS: players, added values, rules, tactics, and scope. These five elements describe all available solutions. To change the game in your favor, you have to change one or more of these elements. Sometimes the best way to succeed is to let others, including your competitors, do well. The most valuable service you can offer is creating competition, so don’t ever give away anything for free. You can profit by using insights from game theory.

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