Game Theory and Its Usefulness in the Development of Innovative Strategies

Abstract

Companies, as well as individuals, believe that they should be in competition with others around them and rarely consider cooperation. We constantly feel that we have to outdo the other player and that the credit is ours. When a company develops its strategy, it must consider what decisions and strategies its competitor is also initiating. Until a black swan appears in the market, companies often do not initiate strategies for a good position in the market. Large companies around the world manage to make a real impact in communities and reduce poverty across vast areas. It is assumed that over time leadership has been greatly undervalued, but at the same time it has now come to be overvalued, considering that it can bring about real change in the organization. The reality is that without a sufficiently good strategy, no leader will be able to bring added value to the organization. In this lesson we will address some theoretical aspects of strategy, as well as game theory. Also, in the second part we will analyze the impact it can have for players who are going to develop a strategy, but there are also some examples and simulations done hypothetically with two players. In the last part of the paper, we will present a series of conclusions and recommendations in what game theory means in the practical life of large companies.

This paper was co-financed by The Bucharest University of Economic Studies during the Ph.D. program.