What’s your next move? That’s the key question every strategist needs to answer.
Game theory can help guide you. It has proved useful in fields such as economics, politics and negotiations, but is much neglected by marketers. That’s unfortunate because there are valuable insights to be gained.
Here’s a quick guide to get you started:
A Bit of History
In the 1920’s, mathematical wizardJohn von Neumann began to think about why he was such a lousy poker player. He realized the problem was that while he was playing cards, he should have been playing his opponents so he worked outtheorem to solve the problem.
In 1944, he teamed up with economistOskar Morgenstern to writeTheory of Games and Economic Behavior, a book so important that it made the front page of the NY times (previously an honor bestowed only on Einstein’s relativity) .
The big deal was that they proved that all 2 playerzero sum games (where one player’s gain is another’s loss), had an optimal solution. It was a breakthrough for fields as diverse as economics and military strategy.
However, most real life situations are not pure conflict. We usually interact with each other for mutual benefit. 6 years later, the problem ofnon-zero games was solved byJohn Nash, the subject of the movieA Beautiful Mind.