Game theory can be applied where:
A)Agents are restrained
B)Firms are very similar and their options are few and similar
C)Hard commitments pay dividends
D)Firms only deter rivals by signaling their intent

Question

Quizplus · Accepted Answer

Game theory is best suited for situations where firms have limited options and are very similar to one another. In such situations, game theory can help predict each firm's actions and the resulting outcomes. Restrained agents (A) and hard commitments (C) can also be applicable, but they are not always necessary for the use of game theory. D is not a valid application of game theory as it focuses on signaling rather than strategic decision-making.

Game Theory Can Be Applied Where