Game Theory: A Modern Explanation
The field of behavioral economics that I find myself a student of, has had a place at Oxford University since the subsegment’s inception nearly two decades ago. Oxford researchers have worked to connect the worlds of psychology and economics in a harmonious unity of academic understanding. The research has been divided into two areas, behavioral decision theory, and behavioral game theory.
Decision theory in economics is the theory of choice. When it comes to unfamiliarity in a market, there is less expected value from that market. Essentially, consumers do not want to be uncertain about a product or service. If they are, they will be less likely to enter into that market making the market itself less valuable.
Game theory is the mathematical approach to decision making. This theory is the study of how each of us makes economic choices under strict rules and guidelines where there is mutual benefit to all parties involved.
Looking at game theory from a business development perspective, it is essentially where a business stands among its competitors and how willing they are to work with or against their competitors to ensure that they are providing the most beneficial product or service to the buyer.
In my early research preparing for my study at Oxford, I concluded that one firm’s knowledge of statutorily controlled market shifts gives them the ability to be non-collusive and control the market majority. Therefore, a competitive advantage can be gained through a detailed understanding and analysis of market variations.
The basis of game theory in which each player could be assumed as a business and where the value 1 represents minimal competitive advantage and 4 represents maximum competitive advantage.