Decisions, Risk and Uncertainty and the Use of Game Theoretic Models: The Example of Intel, Polaroid vs. Kodak and the Breakfast Cereals Industry

Abstract

When the environment is predictable and only a few decision variables are involved, all the assumptions for a game theory approach are present. In particular, it is possible to identify all the possible moves of each of the players and the financial consequences of these moves. This allows decision-makers to identify the optimal strategic move(s) for each of the players. We illustrate this approach using three examples.