Game theory is a mathematically,scientifically proven theory which studies science of strategy.The actions that “players” should take to secure the best outcomes for themselves in a wide array of “games.”game theory have succeeded in describing and prescribing appropriate strategies in several situations of conflict and cooperation.
It can help us to understand why is that a competitor behaves or responds the same way as his opponent does .
Like why coca cola and Pepsi have all similar products?Why is that their pricing for all the products is same?What if one competitor decreases or increases their prices and how it impacts other?
This study which fetched many persons win noble prize because of its help in research.
It is very necessary for all of us to understand this concept as this situation of reactive competitiveness is arising day by day and more and more industry is coming into its effect.
As in the case of prisoners dilemma ,fearing other prisoners would reveal the secret ,the companies are taking some strong move to outcast other players, fearing they would loose the market.
Some such incidents we have recently seen out bursting in telecommunication sector.
Where in due to fear of other player taking such steps they come forward and take this harsh step ,which leads to total disturbance in the sector as a whole.
So with Game theory we can understand the effect and consequences of such steps.