Camerer, Colin F. (1991) Does Strategy Research Need Game Theory? Strategic Management Journal, 12 (S2). pp. 137-152. ISSN 0143-2095. http://resolver.caltech.edu/CaltechAUTHORS:20110211-134332620
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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.
|Additional Information:||© 1991 John Wiley & Sons, Ltd. Thanks to Rebecca Henderson, Marc Knez, Jacqueline Meszaros, Laura Poppo, Dick Rumelt, Dan Schendel, Keith Weigelt, and participants at the Fundamental Issues in Strategy Conference, Napa, CA and a MIT seminar, for helpful conversations and comments.|
|Subject Keywords:||game theory, equilibrium, strategy formulation, economics|
|Usage Policy:||No commercial reproduction, distribution, display or performance rights in this work are provided.|
|Deposited By:||Tony Diaz|
|Deposited On:||10 Mar 2011 20:47|
|Last Modified:||10 Mar 2011 20:49|
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