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Handbook of Quantitative Supply Chain Analysis pp 13–65Cite as

Game Theory in Supply Chain Analysis

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Part of the International Series in Operations Research & Management Science book series (ISOR,volume 74)

Abstract

Game theory (hereafter GT) is a powerful tool for analyzing situations in which the decisions of multiple agents affect each agent’s payoff. As such, GT deals with interactive optimization problems. While many economists in the past few centuries have worked on what can be considered game-theoretic models, John von Neumann and Oskar Morgenstern are formally credited as the fathers of modern game theory. Their classic book “Theory of Games and Economic Behavior”, von Neumann and Morgenstern (1944), summarizes the basic concepts existing at that time. GT has since enjoyed an explosion of developments, including the concept of equilibrium by Nash (1950), games with imperfect information by Kuhn (1953), cooperative games by Aumann (1959) and Shubik (1962) and auctions by Vickrey (1961), to name just a few. Citing Shubik (2002), “In the 50s ... game theory was looked upon as a curiosum not to be taken seriously by any behavioral scientist. By the late 1980s, game theory in the new industrial organization has taken over ... game theory has proved its success in many disciplines.”

Keywords

  • Game theory
  • non-cooperative
  • cooperative
  • equilibrium concepts

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Authors and Affiliations

  1. The Wharton School, University of Pennsylvania, Philadelphia, PA, 19104, USA

    Gérard P. Cachon & Serguei Netessine

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  1. Gérard P. Cachon
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Editors and Affiliations

  1. Massachusetts Institute of Technology, USA

    David Simchi-Levi

  2. Lehigh University, USA

    S. David Wu

  3. University of Florida, USA

    Zuo-Jun Shen

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Cachon, G.P., Netessine, S. (2004). Game Theory in Supply Chain Analysis. In: Simchi-Levi, D., Wu, S.D., Shen, ZJ. (eds) Handbook of Quantitative Supply Chain Analysis. International Series in Operations Research & Management Science, vol 74. Springer, Boston, MA. https://doi.org/10.1007/978-1-4020-7953-5_2

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