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Does strategy research need game theory?

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  • Colin F. Camerer

Abstract

Game theory has not been applied much to business strategy. I review some criticism of the game‐theoretic approach which inhibits its application, and mention some others. The common criticism that game‐theoretic models assume too much rationality is often wrong because (i) some games require little rationality to compute equilibria; and (ii) players may reach an equilibrium by communicating, adapting, or evolving to it rather than by calculating it. However, other criticisms can be forceful: Game theory is hard to use and test, it threatens to explain anything, it generates customized models of local settings rather than general regularities, and it offers only part of the advice a manager needs. Nonetheless, game theory could be a fruitful source of ideas and testable implications for strategy, requiring more fine‐grained, longitudinal studies sensitive to interactions between structural variables.

Suggested Citation

  • Colin F. Camerer, 1991. "Does strategy research need game theory?," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 137-152, December.
    • Handle: RePEc:bla:stratm:v:12:y:1991:i:s2:p:137-152
    DOI: 10.1002/smj.4250121010
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    Cited by:

    1. Sergio Alessandro Castagnetti & Sebastiano Massaro & Eugenio Proto, 2021. "The Influence of Anger on Strategic Cooperative Interactions," Working Papers 2021_05, Business School - Economics, University of Glasgow.
    2. Philippe Mouillot & Rémy Park, 2019. "Rivalry and its mysteries: When Physics leverages Strategy," Post-Print hal-02148900, HAL.
    3. H. Eto, 1999. "Relationship of mathematical programming with mathematics, economic/regional planning and other specialties," Scientometrics, Springer;Akadémiai Kiadó, vol. 45(2), pages 311-324, June.
    4. Jeho Lee & Jaeyong Song & Jae-Suk Yang, 2016. "Network structure effects on incumbency advantage," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1632-1648, August.
    5. Pilli, Luis & Swait, Joffre & Mazzon, José Afonso, 2022. "Jeopardizing brand profitability by misattributing process heterogeneity to preference heterogeneity," Journal of choice modelling, Elsevier, vol. 43(C).
    6. Moldoveanu, Mihnea & Stevenson, Howard, 2001. "The self as a problem: the intra-personal coordination of conflicting desires," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(4), pages 295-330.
    7. Raphael Amit & Paul J. H. Schoemaker, 1993. "Abstract," Strategic Management Journal, Wiley Blackwell, vol. 14(1), pages 33-46, January.
    8. Jackson A. Nickerson & James C. Yen, 2010. "Economizing and Strategizing," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 15, Edward Elgar Publishing.
    9. Hohler, J., 2018. "Reconstruction of empirical strategies using content analysis - an application to the dairy industry," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277123, International Association of Agricultural Economists.
    10. Shun-Jen Hsueh & Hsin-Hong Kang, 2007. "Cointegration relationships of strategy variables among firms within strategic groups," Asia Pacific Journal of Management, Springer, vol. 24(1), pages 61-73, March.
    11. Ott, Ursula F., 2013. "International Business Research and Game Theory: Looking beyond the Prisoner's Dilemma," International Business Review, Elsevier, vol. 22(2), pages 480-491.
    12. João José M. Ferreira & Cristina I. Fernandes & Vanessa Ratten, 2016. "A co-citation bibliometric analysis of strategic management research," Scientometrics, Springer;Akadémiai Kiadó, vol. 109(1), pages 1-32, October.
    13. Agarwal, Rajshree & Croson, Rachel & Mahoney, Joseph T., 2007. "Decision Making in Strategic Alliances: An Experimental Investigation," Working Papers 07-0108, University of Illinois at Urbana-Champaign, College of Business.
    14. Rami S. Al-Gharaibeh & Mostafa Z. Ali, 2022. "Knowledge Sharing Framework: a Game-Theoretic Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 332-366, March.
    15. Douglas P. Hannah & Ron Tidhar & Kathleen M. Eisenhardt, 2021. "Analytic models in strategy, organizations, and management research: A guide for consumers," Strategic Management Journal, Wiley Blackwell, vol. 42(2), pages 329-360, February.
    16. Galvin, Peter & Burton, Nicholas & Singh, Prakash J. & Sarpong, David & Bach, Norbert & Teo, Stephen, 2020. "Network rivalry, Competition and Innovation," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    17. Femke Bekius & Sebastiaan Meijer & Hugo Thomassen, 2022. "A Real Case Application of Game Theoretical Concepts in a Complex Decision-Making Process: Case Study ERTMS," Group Decision and Negotiation, Springer, vol. 31(1), pages 153-185, February.
    18. Nair, Anil & Selover, David D., 2012. "A study of competitive dynamics," Journal of Business Research, Elsevier, vol. 65(3), pages 355-361.
    19. Evelyn Anderson, 2003. "The Enigma of Toyota's Competitive Advantage: Is Denso the Missing Link in the Academic Literature?," Asia Pacific Economic Papers 339, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.

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