Revista de Economía y Negocios

Game Theory in Business: Strategic Decision-Making in Competitive Environments

Abstract

Yanhua Wang*

Game theory, a branch of mathematics and economics, offers valuable insights into strategic decision-making in competitive situations. Originating from the study of games and interactions, it has found profound applications in the business world. Game theory allows companies to analyse the choices of various players, predict outcomes, and devise optimal strategies in scenarios involving cooperation, competition, and negotiation. This article delves into the significance of game theory in business, its key concepts, and its practical implications. Game theory explores how individuals, or "players," make decisions in situations where their choices influence the outcomes for all participants. Each player's decision depends not only on their preferences but also on the strategies chosen by others. This interdependence gives rise to strategic interactions, making game theory a powerful tool for understanding complex decision-making scenarios.