Game Theory

Management > Crisis Management > Lectures > Independent Research > Game Theory > Nash equilibrium > Business Nash Equilibrium

Business Nash Equilibrium

In relation to business, many firms do not have good CM resources as they have the "if it ain't broke, don't fix it" or the "it won't happen to me" approach.

This is a type of Nash equilibrium, as they do not see any benefit from changing their strategy to incorporate a timely and expensive CM project, particularly if no-one else is doing it. If they spend precious resources on CM teams and training and the crisis does not happen, then they may have lost potential profits or market share.

It is a sad fact that many firms respond to threats, rather than opportunities, which means that a major crisis must occur before anything is done.

Strictly dominated strategy

SDS for companies

Iterated elimination of dominant strategies (IEDS)

Minimax

Backward induction

Forward induction