Game Theory is based on a competitive situation
where finite number of competitors having Interests (Conflicting)
and the actions are interdependent to the every active
competitors.
The Main two shortcomings of the Theory of Games are
-
- The analysis of the gaming strategy becomes complex and
difficult with the increase in number of players. As far as taking
into consideration if we take practical example of various firms in
a oligopoly situation, the theory of games is complex to solve the
problem and not useful in that condition.
- If we take practicality in the game theory, the assumed Maximin
and Minimax show that the players are risk averse having complete
knowledge of the strategies being planned for the competition.
The other shortcomings are -
- The players having the knowledge of their own pay-off and
others payoffs are unrealistic in nature. There is a provision of
guess work only because the rival strategies are not known. The
players can just assume the reaction of an action.
- There is a probability of sharing of the strategies or business
secrets among the competitors in order to work in collusion. As
mentioned theory of games doesn't work effectively in Oligopoly.
The mixed strategies are also not useful.