Game Theory Cases in Strategy?

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Game Theory Cases in Strategy?
Kim Warren
Though I have heard of game theory being used in a few particular and special cases (e.g. the auctioning of 3G cellphone licenses) I have not seen anything of it being used in general strategy or business planning. The strategy textbooks dismiss it as too uni-dimensional and limited to special cases to be useful, and I can find virtually no articles in e.g. Harvard Business Review or McKinsey Quarterly giving any encouraging cases where it has been helpful. Does anyone know otherwise?

Game Theory and Strategy
Sekar Vedaraman
The Right Game: Use Game Theory to Shape Strategy by Adam M. Brandenburger and Barry J. Nalebuff HBR - July August 1995.

A Brief Example of Game Theory
Drazen, Member
Hi Kim, to give you a basic idea of game theory it can be used in terms of advertising your product. Say for example when you go to your local shopping centre and you are at the confectionary section, you see Mars bars and usually right beside it is a generic brand which looks to be similar to that of Mars bars. It may not have the same brand but it will contain similar packaging, this organisation has done some clever strategy by looking at economical factors such as price and package design. It then also gains free advertising which Mars has been spending as it only needs to have the product next to it to gain this benefit as the customer may just consider this substitute.

Game Theory in Practice
Michael Cunningham, Member
Hi Kim, in the UK there is a current case of Game Theory being used on the high street. 1 of the largest supermarkets has made an unconditional move to "not be beaten on price" this has forced the market leader to follow suit and now instead of competing on price, prices are actually rising. This scenario is explained in "thinking strategically" by Dixit and Nalebuff which gives many real life examples of Game Theory in practice.


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