Game Theoretic Models

Marketing dictionary

Game Theoretic Models

Models that use game theory to predict the actions of either cooperative or competitive individuals (or firms). In cooperative game theory, the agreements that emerge from colluding individuals are examined. Noncooperative game theory is concerned with the actions of rational, intelligent individuals competing independently. A key element of this theory is the Nast equilibrium, i.e., a set of strategies, one for each individual, such that no individual would then unilaterally like to change the strategy. Typically, the individuals are assumed to adopt strategies in accordance with this equilibrium (assuming that such an equilibrium exists). For an overview of game theory in marketing, see Moorthy (1985). Source: AMA

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