Blog entry by Alexis Meisel
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Yet another use of game theory in managerial economics is in analyzing pricing methods. For instance, firms may well use game theory to figure out the optimal pricing technique based on how they anticipate their competitors to respond to their pricing decisions. Overall, game theory serves as a beneficial tool for analyzing strategic interactions and selection producing in the context of managerial economics. Games, as studied by economists and true-world game players, are usually finished in finitely many moves. Constant-sum games correspond to activities like theft and gambling, but not to the basic financial predicament in which there are possible gains from trade.
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