Investigate that "Game theory is grounded in well established theory, but it is too hard to use in developing and implementing international business strategy"

Introduction

Since in 1994, John Nash, John Harsanyi, and Reinhard Selten were awarded the Nobel Prize in political economy (Crainer, 1996), business people had started to apply the crippled possibleness in the business dodge. Some people argued that spunky theory is rise established theory, but it is too hard to use in snap offing and implementing world(prenominal) business strategy. In the authors opinion, even though adventure theory has some demerits to apply in the international business strategy, it is still contributed to the international business strategy. This paper leave behind introduce the game theory briefly, describe some disadvantages of game theory to apply in the international business strategy, and whence discuss why game theory preempt develop and implement international business strategy to support authors argument.

Game theory

In simple terms, it is a set of complex mathematical formulae that shows how decisions hazard each other, by offering a comprehensive story of how interdependent individuals, corporations, and governments make strategic choices (Murdoch, 1999). In the business discipline, game theory deals with how to cooperate and compete with customers, suppliers, complementors and substitutors with profound consideration.

Why game theory is hard to use in international business strategy?

Game theory is based on some hypotheses but in reality, maybe, the conditions of games dont match the hypotheses.



For instances, game theory assumes all players be reasonable and believe others are rational (De Wit and Meyer, 1998). It is almost impractical in every occasion of business game. Additionally, as the subprogram of players increases, the model of game theory becomes more complicated. According to (Crainer, 1996), game theory is most effective in the scenarios where there are only limited players and players behave in rational ways. This can explain why members of Cartel show excessively cheer to use game theory. Besides, in game theory, the models, depending...

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