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ESG Reporting & Compliance: Applied Frameworks
Game Theory in Pricing
Applying game theory concepts to analyze strategic pricing decisions in competitive markets, predicting competitor reactions and optimal outcomes. ✨
Article Points:
1
Game theory analyzes strategic interactions where outcomes depend on choices of multiple players.
2
Players: Competing firms; Strategies: Pricing actions; Payoffs: Profits/Market Share.
3
Nash Equilibrium: No player can improve their outcome by unilaterally changing strategy.
4
Prisoner's Dilemma: Illustrates why firms might end up in a price war despite mutual benefit from cooperation.
5
Helps understand competitor reactions, avoid price wars, and inform differentiation strategies.
6
Crucial for oligopolistic markets where firms' decisions are highly interdependent.
Source:
Game Theory in Pricing
Game Theory in Pricing
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Source:
Game Theory in Pricing