Game Theory

Since starting my MBA, I have had an increased appreciation ( or shall I call dawning) of how businesses and business interactions are not linear. Although this was not completely surprising, it was surprising to see how full areas of studies have been developed for understanding this. I came across this in organization behavior, marketing and now strategy. Soft skills is one of the benefits an MBA which is not highlighted enough in my opinion. I am not sure what undergraduate course would prepare you well for this.

In the competitive strategy course that I am taking this summer, half of the course focuses on Game Theory. Per Wikipedia “Game theory is a branch of applied mathematics that is used in the social sciences (most notably economics), biology, engineering, political science, computer science (mainly for artificial intelligence), and philosophy.” In the field of business, it talks about how to understand situations as they apply to business interactions and based on that understanding make best use of the environment (inc. competitors, etc). It tells you what you could do to maximize your chances of winning.

I find it truly fascinating. What fascinates me most about it is it’s relevance in our everyday professional lives. It explains the logic behind how certain interactions could be in your favor, vs. other that would not. Its good to realize that you are not working in isolation, and that any step taken by you would like invoke a response from your competitors. It’s good to know what the other party might be thinking when negotiating. I find myself using this more and more often at my current job. Its also fascinating because it helps you improve in a field that MBAs are trained for – people management. Many other courses teach you the same, but there’s a certain smartness about this approach (perhaps because its roots are in Mathematics) which will make me think more of the subject even after the course ends.

One of the recommended books on this subject (within the domain of Competitive Strategy) is “Thinking Strategically” by Nalebuff and Dixit. Although I am still going through it, it is turning out to be an entertaining and thought provoking read.

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One thought on “Game Theory

  1. kristy4u says:

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