1994 - John Nash given Nobel Prize for original work in Game Theory.

What is it? Game Theory is the analysis of all possible decision-combinations taken by all participants involved in a strategic issue.

In many business situations multiple decision-makers (or “players”) with conflicting interests must choose an action that affects both the actions other players may take and the rewards for all parties involved.

Game Theory is a branch of mathematics that models such situations in order to determine the strategies decision-makers should adopt to best achieve their goals.

Due to the complexity of the interactions between players, other more traditional decision analyses are insufficient. Game Theory is precisely about making optimal decisions when facing dynamic opponents.

Game Theory-Present Day

Traditionally applied by governments and only the largest corporations, advances in computer technology have now leveled the playing field. Professionals today are employing Game Theory models and methodology for:

• Arbitration	• New Product Introductions
• Conflict Resolution	• Engineering corporate strategy
• Labour Disputes	• Forming strategic alliances and joint ventures
• Negotiation	• Bidding

 

Game Theory – Success Stories

Some ground-breaking Game Theory applications:

• FCC to perform $7B auctioning of broadcast frequencies & 3rd generation mobile licenses
• Homeland Security to analyze the risk of future terrorist attacks
• Hewlett-Packard to develop its framework for an automated Negotiation Support System
• IBM and Mars Inc. to save Freight Sales $70 million a year through a game-theory based procurement system
• Major League Baseball to perform salary negotiations
• US President George W. Bush Presidential Campaign Strategy Team to help win 2 elections
• Panama Canal Negotiations (1978) to unravel intractable diplomatic entrenchments

Stay ahead of the game - Anticipate and influence the

actions and reactions of other parties.

 

1. Consultation
• Co-client exploration and definition of issues and involved parties.
• Market/industry experts brought in if required.
• Co-client selection of scenario and player preference mappings.
  


2. Modeling
• Define the “scenario state-space” which lists all possible decision-combinations among the parties involved.
• Preferentially rank decision-combinations according to the goals of each decision-maker.
  


3. Analyses

Our powerful algorithms conduct and trace Path Analyses (tactics) from the status-quo (the strategic issue as it stands now) to Unilateral Improvements (competitive stance) or Mutually-Beneficial Resolutions (co-operative stance). This provides a step by step means of moving the strategic issue to a predetermined resolution.
• Equilibria Tests: for identifying the absorbing states (likely resolutions) in the game and the forces that sustain these. These decision-combinations are absorbing states from which no decision-makers would have a unilateral unsanctioned incentive to deviate from.
• Simulations: for iterative scenario/policy testing


4. Solution Delivery
   To ensure full transparency and understanding of the model and its implications, we provide:
• Comprehensive reports detailing recommendations, with:
  • Prescriptive detail: to predict, anticipate and influence the decisions of the other parties.
  • Descriptive detail: for conflict resolution, dispute mediation and arbitration
  
  
• A dynamic real-time decision support system (DSS), if applicable

Improve Negotiation Performance: Define your negotiation position and gain true bargaining power.	Identify Opportunities: Break dogmatic thinking. Reveal all options and strategies, and then choose the best one.
Increase Visibility: Know what to expect – reduce uncertainty, or profit from it.	Build Consensus: Single out issues and strategies.
	Own Your Strategy: Assume control. Seize the initiative. Should you compete or co-operate? What have you overlooked?

>>Download our Game Theory Information Sheet