Application of Game Theory to Business Decision-making

Faculty of Science, The University of Nottingham-Ningbo (315100), Ningbo, China

^* Corresponding author: smyyx10@nottingham.edu.cn

Abstract

How to make correct business decisions has become a hot issue that entrepreneurs are concerned about. Some researchers have found that game theory greatly impacts business decisions. However, there is still a lack of a unified explanation of the formation mechanism behind using game theory to make correct business decisions. Therefore, this article explores the use of game theory to make correct business decisions by collecting data on business competition, organizing the data into a benefit matrix, and comparing to conclude, through which the benefits of business cooperation and business competition can be demonstrated. Through research, it is found that game theory plays an important role in business decision-making, which makes a significant difference in planning the future development path of the enterprise. By using game theory models such as the Prisoner’s Dilemma and boxed pigs, entrepreneurs can make optimal business decisions. Through an in-depth understanding of the relevant knowledge of game theory, entrepreneurs can know the timing and maximum benefits of business cooperation and competition, which provides important tips for enterprise reform and development in the new era.