Game Theory In Management Science Essay

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Game theory and her application in management science Imagine as an illustration, there has been committed a serious crime. Two men are caught and it seems that they are the perpetrators, but there is no evidence. They are put in a cell separately and they cannot communicate with each other. The police give them both a proposal: “if you both stay silent, I cannot do anything. You will only get a fine for possession of firearms.” If one confesses, this case is closed. The one who confesses will be free, the other one will go to prison for ten years. If you both confess, you will both get five years. The main question: what is the best decision for the prisoner, considering the possible action of his
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It is related to operational research. The Allied forces asked scientists of different disciplines, including economists, to assist them during the military operations. The scientist applied mathematical models on to make sure the army proceeded efficiently with scarce resources and technologies. “Economists establish during the war their own ‘colony’ of operational research which is called management science” - Herbert A. Simon(1979). According to Anthony Stafford Beer(1968) :“The aim of management science is to display the best course of action in a given set of circumstances, and this must include all the circumstances.” It uses economic implications as a guideline for making management decisions. Making decisions, or decisions making, and observing and analysing them very important in this field What is game theory? Now that we have had a brief overview of management science, we can look at game theory. According to the Cambridge dictionary game theory is “a mathematical theory about how decisions are made in situations where one person 's decision affects another, that is used in many fields such as economics.” There are three types of games: games of skill, change and strategy. The first two are single player games. Game of strategy are games involving two or more people according to Anthony Kelly(2003). A player is a person, an organisation, a firm or a party.
Game theory and management
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