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Does Strategy Research Need Game Theory?

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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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.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://www.jstor.org/stable/2486438PublisherUNSPECIFIED
http://dx.doi.org/10.1002/smj.4250121010DOIUNSPECIFIED
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
Record Number:CaltechAUTHORS:20110211-134332620
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20110211-134332620
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22145
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:10 Mar 2011 20:47
Last Modified:10 Mar 2011 20:49

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