The use of game theory in building sustainable competitive advantage

Abstract

Creating sustainable competitive advantages is central to both the success and longevity of firms competing in today’s business environment. One powerful tool that businesses can learn from and utilize to potentially foster such advantages is game theory. Further, we have thoroughly researched previous studies and determined three areas in which competitive advantages can be derived from the implementation and understanding of game theory principles. These include improved decision-making, supply chain management, and employee management. Our goal is to analyze the works of experts on the subject to further our understanding of the topic. This research will provide a foundation for the subsequent justifications on how game theory can be utilized to create the competitive advantages we specified. Reviewing our findings has led the researcher to believe that firms of any variety looking to improve their decision-making, supply chain management, and/or employee management could find great value, if not create fully realized competitive advantages, from taking game theory and its observations into consideration.