# Game Theory By [3swap.eth](https://paragraph.com/@3swap) · 2023-05-13 --- ### Project Management [Project management](https://www.investopedia.com/terms/p/project-management.asp) involves social aspects of game theory as different participants may have different influences. For example, a project manager may be incentivized to successfully complete a building development project. Meanwhile, the construction worker may be incentivized to work slower for safety or delay the project to incur more billable hours. When dealing with an internal team, game theory may be less prevalent as all participants working for the same employer often have a greater shared interest for success. However, third-party consultants or external parties assisting with a project may be incentivized by other means separate from the project's success. ### Consumer Product Pricing The strategy of [Black Friday](https://www.investopedia.com/terms/b/blackfriday.asp) shopping is at the heart of game theory. The concept holds that should companies reduce prices, more consumers will buy more goods. The relationship between a consumer, a good, and the financial exchange to transfer ownership plays a major part in game theory as each consumer has a different set of expectations. Outside from sweeping sales in advance of the holiday season, companies must utilize game theory when pricing products for launch or in anticipation of competition from rival goods. The company must balance pricing a good too low and not reaping profit, yet pricing a good too high may scare customers away towards a substitute good. Types of Game Theories ---------------------- ### Cooperative vs. Non-Cooperative Games Although there are many types (e.g., symmetric/asymmetric, simultaneous/sequential, etc.) of game theories, cooperative and non-cooperative game theories are the most common. Cooperative game theory deals with how coalitions, or cooperative groups, interact when only the payoffs are known. It is a game between coalitions of players rather than between individuals, and it questions how groups form and how they allocate the payoff among players. Non-cooperative game theory deals with how rational economic agents deal with each other to achieve their own goals. The most common non-cooperative game is the strategic game, in which only the available strategies and the outcomes that result from a combination of choices are listed. A simplistic example of a real-world non-cooperative game is rock-paper-scissors.  ### Zero-Sum vs. Non-Zero Sum Games When there is a direct conflict between multiple parties striving for the same outcome, this type of game is often a [zero-sum game](https://www.investopedia.com/terms/z/zero-sumgame.asp). This means that for every winner, there is a loser. Alternatively, it means that the collective net benefit received is equal to the collective net benefit lost. Almost every sporting event is a zero-sum game in which one team wins and one team loses. A non-zero-sum game is one in which all participants can win or lose at the same time. Consider business partnerships that are mutually beneficial and foster value for both entities. Instead of competing and attempting to "win", both parties benefit. Investing and trading stocks is sometimes considered a zero-sum game. After all, one market participant will buy a stock and another participant sell that same stock for the same price. However, because different investors have different risk appetites and investing goals, it may be mutually beneficial for both parties to transact. ### Simultaneous Move vs. Sequential Move Games Many times in life, game theory presents itself in simultaneous move situations. This means each participant must continually make decisions at the same time their opponent is making decisions. As companies devise their marketing, product development, and operational plans, competing companies are also doing the same thing at the same time. In some cases, there is intentional staggering of decision-making steps in which one party is able to see the other party's moves before making their own. This is usually always present in [negotiations](https://www.investopedia.com/terms/n/negotiation.asp); one party lists their demands, then the other party has a designated amount of time to respond and list their own. ### One Shot vs. Repeated Games Last, game theory can begin and end in a single instance. Like much of life, the underlying competition starts, progresses, ends, and cannot be redone. This is often the case with equity traders that must wisely choose their entry point and exit point as their decision may not easily be undone or retried. On the other hand, some repeated games continue on and seamlessly never end. These types of games often contain the same participants each time, and each party has the knowledge of what occurred last time. For example, consider rival companies trying to price their goods. Whenever one makes a price adjustment, so may the other. This circular competition repeats itself across product cycles or sale seasonality. In the example below, a depiction of the Prisoner's Dilemma (discussed in the next section) is shown. In this depiction, after the first iteration occurs, there is no payoff. Instead, a second iteration of the game occurs, bringing with it a new set of outcomes not possible under one shot games. --- *Originally published on [3swap.eth](https://paragraph.com/@3swap/game-theory)*