Decision Making Using Game Theory (An Introduction For Managers)

1. Decision Making Using Game Theory(An Introduction For Managers)Iran Bahar Business SchoolCompiled By : Ali Salek

2. Introduction Game Theory attempts to mathematically capture behavior in strategic situations, in which an individual's success in making choices depends on the choices of others.

3. GameTheoryEconomists:Theory of Social SituationsPsychologists :?How groups of people interact

4. Basic Constituents 1 - Players 2- Actions & Strategies 3- Rules 3-1- Sequence 3-2- Information Structure 3-3- Outcomes 3-4- Pay-Offs

5. Types of games One-player & Many-player games Cooperative & Non-cooperative Zero-sum & Non-zero-sum Symmetric & Asymmetric Simultaneous & Sequential Perfect information & Imperfect information Infinitely long games Discrete & Continuous games Meta games

6. Game Theory Games of Strategy Games of Skill Games of Chance Two - Person Risk Multi - Person Uncertainty

7. BranchesGames of strategy GameCooperative (Players’ interests coincide) Non-cooperative Game ((Zero-Sum (Players’ interests are conflicting) HybridGame ((Players’ interests are simultaneously opposed & coincident

8. Economic Theory Branches Decision Theory - Single player against nature - How best acquire information before making decision General Equilibrium Theory - Deals with trade & production - Used in macroeconomic analysis Mechanism Design Theory . types of rules - Asks about the consequences of different - Use Meta game type (development of the rules for another game)

9. Game Theory Application In Management Industrial Organization Strategies Corporate Finance Mechanism & Auction Design

20. Game Features 1- Simple representation of a variety of important situations. 2- How an intelligent individual should behave! Conflict between the pursuit of individual goals and the common good, is at the heart of many games . 3- Game changes in a very significant way if .the game is repeated << Game theorists have provided a number of theories >> If the game is repeated often enough, the suspects !ought to cooperate Contribute to the common good Behave selfishly

21. The difference between genius and stupidity is that genius has its limits! Albert Einstein

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