MANAGERIAL ECONOMICS Reflection on Game Theory and Pricing Strategy According to the definition of game theory, it refers to a conceptual framework that makes social interactions involving several participants who are in competition with one another simpler. Addressing problems with participants' capacity for rational decision-making when cooperating or at odds is beneficial. The idea is to identify an ideal rational choice in a variety of situations, including new product launches, mergers, acquisitions, etc. Undoubtedly, I know very little about game theory. Its idea is so great that it caused me to reconsider how I should view a company's path to success. In the past, I believed that the key to industry success lay in eliminating rivals and emerging as the war's lone victor. It's obvious that this viewpoint favors the victor. At the time, capturing the entire market was the real goal. I came to the realization that I'm far too removed from the insight that wise strategists possess after reading the theory and the cases that were appropriately referenced. Concerning more details. Between game theory and decision theory, there is a huge chasm. Let me explain because I know that many people are still unclear about these two. In situations when one person's decision has no bearing on others' decisions and others' decisions have no bearing on that person's decision, decision theory analyzes how people make decisions. The study of decisionmaking in situations where people's actions have an impact on one another is known as game theory. This game theory can be applied to any scenario with a minimum of two players, quantifiable outcomes, and predetermined rules. The idea aids participants in determining the most likely outcomes while taking into account how the decisions and deeds of other players will affect the outcomes. Pricing strategies are the processes and strategies that businesses use to establish the prices for the goods and services they offer. Customers can start to become unduly fixated on costs alone together with rising competition and oversaturated marketplaces. The risk of excessive price sensitivity is that firms lose control over consumer purchasing habits and have less room to drive value. There are two strategies mentioned in the report, namely; Pure and Mixed Strategy. In game theory, a pure strategy entails picking a specific action or decision with a known likelihood of success. It is independent of chance or randomness and is based on the player's thorough understanding of the game and their opponent's actions. On the other hand, in game theory, choosing various actions while allocating probabilities to each action is known as a mixed strategy. In games where the result is unpredictable, frequently uses chance or randomness to add uncertainty to the decision-making process. Your product's value is reflected in the price. Some consumers might see low production costs as indicating a low-quality good. Another possibility is that a high price indicates good quality but may turn away clients. Companies can strike a balance and take into account what customers desire by using pricing strategies.
