Game Theory and Strategic Behavior
Game theory is used in a competitive situation where an optimal decision needs to be made. This requires a strategy, which is the plan of action under the given circumstances (Camerer, 2010).If GE chooses to increase advertising so as to prevent MAYTAG from entering the market, it may succeed or fail in that strategy. MYTAG could also be considering the same and, in this case. If GE increases the advertising, MAYTAG gets little payoff since $0m<$1m thus it is not economical for MYTAG to enter the market. In this case, GE Company’s strategy works well, and Continue reading...