Question

Explain the "Game Theory" in terms of socio-economic analysis and the three main perspectives to which this theory contributes.

Answer 1

Game theory is used widely today in competitive world to compete their rival.Game theory basically deals with modeling of strategy when two and more players want satisfactory outcome. Game theory is used as valuable tool for  fundamental analysis of industries, sectors and any strategic interaction between two or more firms..

So according to socio-economic analysis game theory help to society and business to make proper strategy or model to compete when two or more than two players involve in business.

three main perspectives to which this theory contributes.are discussed below;

1.In Business-Game theory is used for pricing a product when pricing strategy based on game theory model.

2.In Managerial decision making-Game theory is highly contributed in managerial decision making.By using game theory manager can take better decision and their organization perform well because game theory explain what are the possible action and outcome available when two firm competing in same business.

3.Retail -in retail business too many organization competing with each other.Basically selling goods as a retailer is more tough compare to wholesaler or manufacturer,In most of the cases retailer found perfect competition ,so in this case it is not easy to set reasonable price.So for charging reasonable price Game theory is used by retailer.