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Note on Application of Game Theory in Business
內容大綱
Business happens in a network consisting of different firms who have correlations with each other. For example, an automobile manufacturer has many dealers in different locations. There are correlations between the manufacturer and the dealers and correlations among the dealers. Each firm's decision on matters such as price influences the other firms' profits. By using the concept of game theory, such a decision can be based on a reasonable rationale. Yet, to apply game theory to real-world problems, we must first understand the "game rules" in business through analyzing horizontal and vertical correlations between firms and how such features as information asymmetry affects the equilibrium solution.