Game Theory In Strategy

J. H. Powell

in The Oxford Handbook of Strategy

Published in print April 2006 | ISBN: 9780199275212
Published online September 2009 | | DOI:

Series: Oxford Handbooks in Business and Management C

Game Theory In Strategy

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  • Business Strategy



The contribution of game theory to the understanding of economic and other social processes during the latter half of the twentieth century has been immense. This article concentrates on an understanding of the relevance of certain key types of game to strategy. For example, it examines the relevance of iterated games to the reputation-building process in an industry. Stylized games like Chicken and Rendezvous, where participants are, respectively, in irremediable opposition and in complete (but defective) cooperation, mirror many strategic processes and inform our thinking about pre-commitment and norms of expectation, respectively. Examination of situations where equilibrium among the participants is achieved by adopting an evolutionary stable strategy (Hawks and Doves) shapes our thinking about the level of analysis of our strategic intent. Lastly, the latest methods of representing specific conflict–cooperation relationships between companies are discussed in order to show that game theory is capable of doing more than discussing strategic situations in general, and can, in fact, be used for specific action planning.

Keywords: game theory; business strategy; social process; reputation-building process; conflict–cooperation relationships; action planning

Article.  13964 words. 

Subjects: Business and Management ; Business Strategy

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