Decision making is tough. Whether it’s deciding which b-school to apply for, or which companies to prepare for or which career to choose, it’s all about making the right and relevant decisions. After all, it’s a fact that decisions made today shape the future. So how to make effective decisions? And how to bet on the right future? There are some interesting decision making frameworks taught at b-schools and otherwise. One of them is game theory. Game theory is applicable in sports, economics, war, politics, public policy and above all, business. In this video, Prof. Sumit Sarkar, Professor of Economics at XLRI Jamshedpur, shares what makes game theory important for management students. If you want to know how CEOs, CFOs and C - Suite professionals make decisions, this video will have answers for you.
Summary of the video:
In this video, Prof. Sumit Sarkar, InsideIIM’s Professor of the year voted by XLRI Jamshedpur students in 2019 takes us through the evolution of game theory. He tells us how game theory came to be and exactly what it refers to.
Basically, it’s a framework discovered by Nobel Laureates John Nash, Harsayani and Selten. It involves understanding all aspects of a given situation in the form of a game. Once you know all the aspects of a given situation, you can make relevant business and strategy decisions based on the different factors.
Prof. Sarkar talks about how game theory came to be an accepted framework in management. He takes us through the evolution of the subject and shares how it is taught at various b-schools across India and the world.
Next he talks about a model that game theorists and decision makers often use, called the Value Net Model. He shares how this model is used to figure out the major players of the game and to anticipate and judge their decisions.
Finally, he talks about Uber and how they would use game theory to plan their pricing strategies. If you want to know how to create strong strategies, this is a must watch for you.
1. Game theory is a decision making framework.
2. When the rules of the game change, you’ll have to adapt yourself to the changed rules!
3. Strategy needs to be designed to trump competition in order to increase market share.
4. Use game theory to anticipate what your competition, consumers, and complementors or suppliers will do and design your strategy that way.