Simultaneous Movement Game

Game theory is a very useful tool for making pricing decisions when competitors have more information about the market conditions. Game theory is concerned with how Individuals or the Company makes decision knowing it will have effect on each other's such as all the competitor considering each individual takes this into account. In the gaming theory one should consider factors such as reaction of competitors or tastes and preferences of consumers remain constant. The order in which players make decision is very important in the gaming analysis. In the Simultaneous move game, each player makes decision without the knowledge of other player's decision where as in sequential move game the move is after observing other players move. In the case of repeated game the underlying game is played many times and certainly more than once (Brue, Mcconnell, C. R and Flynn, 2014, p. 378 - 385).
The previous utility company, I worked had a advantage of utility generation and distribution compare to some of its competitors, who purchased utility from third party generators and distributed to the consumers using our distribution systems for a fixed price. Our pricing strategy of low price with long term contract worked fine, but the competitor started selling fixed slab for a very low price during off peak hours. Some of our customers moved for the very low …show more content…
With experience players following their best strategies are one way of changing the structure of the strategic interactions even before starting the game. According to Brandenburger and Nalebuff (1995), a gaming strategy are a) with a rule of engagement such as contracts and trade agreements, and b) with freewheeling games where one can interact without any constraints and create value by transacting in an unstructured fashion. Business uses both game strategies as a mix in their daily decisions