What is game theory?
A) Firms try to maximize their profits by acting in ways to minimize damage from competitors.
B) Firms attempt to capture competitors markets by developing slightly differentiated products
C) Firms try to gain market shares through predatory pricing.
D) Firms attempt to maximize market share through strategic advertising and product placement.

Question

Quizplus · Accepted Answer

Game theory is the study of strategic decision making in situations where two or more individuals have competing interests. It involves analyzing the actions and decisions of firms or individuals and predicting their behaviors based on assumptions about their goals and motivations. Option A best describes game theory as it focuses on profit maximization and minimizing damage from competitors. The other options may be tactics used by firms but do not fully capture the essence of game theory.

What Is Game Theory