TheGame Theory


Thearticle “MakingGame Theory Work for Managers”has been authored by Hagen Lindstadt and Jurgen Muller. The articleindicates that game theory needs to be used in the frontline as astrategic tool during times of uncertainty. This is because the gametheory offers ideas on how players may act under differentcircumstances. Also, the game theory provides valuable informationthat can be used in making decisions. Despite the important role thatgame theory is indicated to play during uncertainties, the authorsnote that managers are suspicious of game theory because they thinkthat it is more theoretical than practical. When the managers applythis concept, it is often misused in providing a single, excessivelyexact answer to complex problems (Lindstadt &amp Muller, 2010).

Theauthors posit that the game theory can offer timely guidance tomanagers in tackling difficult and unprecedented circumstances. Thekey is to utilize the discipline in developing different outcomesbased on decisions by rational actors and present merits and demeritsof each option. The model of the authors changes game theory from atool that produces a specific answer to a system that gives informedsupport to managerial decisions. Also, the authors argue thatdifferent factors in today’s economic environment need to propelgame theory to an outstanding place in corporate strategy. Theauthors use the rail model in showing how the games theory can beutilized by managers of corporate in making sure that they obtainoutcomes that support managerial needs. The article concludes byhighlighting that game theory is a powerful framework that givesmanagers the ability to analyze systematically the ties amidinteractions between actors in a market in developing appropriatecompetitive strategies (Lindstadt &amp Muller, 2010). However, thearticle claims that the game theory is only helpful in caseexecutives expect a tool that aids them to make informed decisionsbased on different actions by each player, but not a single solutionthat solves the entire riddle.

Theauthors of this article have clarified that it is feasible to applygame theory in today’s world. As the authors had initially noted,managers tend to think that the tool is more theoretical thanpractical. However, the authors made it clear that it can be appliedpractically. Different researchers have advocated the same ideaconcerning this concept and have actually indicated that it can workpractically. Also, different firms have applied game theory in makingdecisions and have reaped the benefits. For instance, Mesquita &ampRoundell Company is one of the entities that have managed to depictthat it is possible to apply game theory practically.

Thearticle has been in a position to acknowledge that game theory is apowerful framework that gives managers the ability to analyzesystematically the ties amid interactions between actors in a marketin developing appropriate competitive strategies, when faced withdifferent actions. As Mitchell Osak notes in her article “UsingGame Theory to Improve Strategic Decision Making,”game theory helps companies in making high-risk strategic decisionsin competitive markets and situations. Mitchell shows the importanceof using game theory in competitive situations, implying that thereare different actors in the market. Furthermore, just like the“MakingGame Theory Work for Managers”article, Mitchell’s article indicates that game theory is a greattool for predicting results of a group of interacting firms (Osak,2010).

Althoughthe article has mentioned a lot of things concerning the game theory,it failed to mention strategy games. These are well-definedmathematical scenarios, which comprise a set of players that may beeither firms or individuals, different strategies to the players, andpayoff plan for each strategies combination. The game theoryprinciples become leveraged by strategy games.


Thearticle “Gettinginto Your Competitor’s Head”was written by Hugh Courtney, John Horn and Jayanti Kar. The mainidea of the article is that in order to predict the moves of thecompetitors, it is critical to have an understanding of the rivals’strategists and decision makers’ way of thinking. According to thearticle, symmetrical competition is likely to emerge in case onebusiness tends to think as its rival since the entities are likely topursue similar strategies. However, the competition may beasymmetrical if rival businesses adopt varying strategies (Courtneyet al., 2009). The authors note that in order to forecast the nextmove of a competitor, it is crucial to consider the incentives andpreferences of the rival’s decision makers.

Thearticle argues that different parties in an organization should getinvolved in making decisions, and senior executives cannot beconsidered to be perfect always in coming up with strategies. Inmaking certain decisions, it is critical to engage frontline workersand managers. For instance, operational, marketing, price making, andservice decisions that influence the competitive advantage of anorganization (Courtney et al., 2009).

Theauthors claim that once businesses have a better sense of the optionsthat their competitors may consider and the manner in which they mayassess the options, they can apply game theory so as to establish,with substantial confidence, the strategies that are likely to befollowed by the competitors in maximizing their objectives, and theway the choices may impact the strategies (Courtney et al., 2009).The authors conclude by indicating that it is important to avoidpredicting the exact behavior of competition, but one should focus onscenario planning so as to have strategic possibilities that a firmcan adopt.

Thearticle is significant in identifying the importance of using gametheory when faced with different options regarding competition. Thearticle posits that it is critical to consider game theory since ithelps in the evaluation of the available options to an organization.Thus, just like the article points, this tool is an exceedingly vitalone when it comes to making crucial decisions that are likely toinfluence the operations of an organization (Courtney et al., 2009).

Despitethe article providing the importance of using game theory while facedwith different options, it fails to explain clearly what game theoryinvolves. This could have been an important concept since it couldhave provided a broad explanation of what game theory is and howorganizations can use the tool in maximizing their strategies. Also,the article fails to indicate that game theory can be used in otherareas since it has only emphasized on competition scenario.

Inconclusion, it can be argued that both articles show that the use ofgame theory is exceedingly critical in scenarios where entities arefaced with different options, and they desire to make a decision onthe strategy to adopt. Also, the articles have depicted that it ispossible to use the tool in making organizations successful.


Courtney,H., Horn, T.J. &amp Kar, J. (2009). Getting into Your Competitor’sHead. McKinseyQuarterly.

Lindstadt,H. &amp Muller, J. (2010). Making Game Theory Work for Managers.McKinseyQuarterly.

Osak,M. (2010). Using Game Theory to Improve Strategic Decision Making.FinancialPostRetrieved from