Game theory

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Game theory



Alternate name(s)

Theory of Games, Theory of Social Situations

Main dependent construct(s)/factor(s)

Cost and benefit of option/decision made

Main independent construct(s)/factor(s)

Own strategies/decisions - Other players' strategies/decisions

Concise description of theory

Game theory is a branch of applied mathematics that uses models to study interactions with formalized incentive structures ("games"). Unlike decision theory, which also studies formalized incentive structures, game theory encompasses decisions that are made in an environment where various players interact strategically. In other words, game theory studies choice of optimal behavior when costs and benefits of each option are not fixed, but depend upon the choices of other individuals.

Game theory has applications in a variety of fields, including economics, international relations, evolutionary biology, political science, and military strategy. Game theorists study the predicted and actual behaviour of individuals in games, as well as optimal strategies. Seemingly different situations can have similar incentive structures, thus all exemplifying one particular game.


Diagram/schematic of theory


Originating author(s)

John von Neumann, Oscar Morgenstern

Robert J. Aumann, Thomas C. Schelling (2005 Nobel prize winners)

Seminal articles

Nash, J. (1951). Non-Cooperative Games. Annals of Mathematics, 54(2), 286-295.

John von Neumann and Oskar Morgenstern. (1944). Theory of games and economic behavior. Princeton: Princeton University Press.

Aumann’s, R., & Schelling’s, T. (2005). Contributions to game theory: analyses of conflict and cooperation.

Originating area

Micro-Economics, Mathematics

Level of analysis

Individual, Group, Firm, Industry

IS articles that use the theory

Anandalingam, G., Day, R. W., & Raghavan, S. (2005). The landscape of electronic market design. Management Science, 51(3), 316.

Ba, S., Stallaert, J., Whinston, A. B., & Zhang, H. (2005). Choice of transaction channels: The effects of product characteristics on market evolution. Journal of Management Information Systems, 21(4), 173.

Baiman, S. (1975). The evaluation and choice of internal information systems within a multiperson world. Journal of Accounting Research, 13(1), 1-15.

Balakrishnan, A., & Whinston, A. B. (1991). Information issues in model specification. Information Systems Research, 2(4), 263-286.

Bapna, R., Goes, P., & Gupta, A. (2003). Replicating online yankee auctions to analyze auctioneers' and bidders' strategies. Information Systems Research, 14(3), 244-268.

Barkhi, R. (2005). Information exchange and induced cooperation in group decision support systems. Communication Research, 32(5), 646-678.

Bichler, M., Field, S., & Werthner, H. (2001). Introduction: Theory and application of electronic market design. Electronic Commerce Research, 1(3), 215.

Bichler, M., & Segev, A. (2001). Methodologies for the design of negotiation protocols on E-markets. Computer Networks, 37(2), 137.

Butterfield, J., & Pendegraft, N. (2001). Analyzing information system investments: A game-theoretic approach. Information Systems Management, 18(3), 73.

Chiang, W. K., Chhajed, D., & Hess, J. D. (2003). Direct marketing, indirect profits: A strategic analysis of dual-channel supply-chain design. Management Science, 49(1), 1.

Clemons, K, E., & Row, C, M. (1993). Limits to interfirm coordination through information technology: Results of a field study in consumer packaged goods distribution. Journal of Management Information Systems, 10(1), 73.

Coffee, P. (2001). Not just dumb bugs anymore. EWeek, 18(38), 47.

Dellarocas, C. (2003). The digitization of word of mouth: Promise and challenges of online feedback mechanisms. Management Science, 49(10), 1407.

Demirhan, D. (2004). Factors affecting investment in it: A critical review. JITTA : Journal of Information Technology Theory and Application, 6(4), 1.

Dibbern, J., Goles, T., Hirschheim, R., & Jayatilaka, B. (2004). Information systems outsourcing: A survey and analysis of the literature. Database for Advances in Information Systems, 35(4), 6.

Dworman, Garett, Kimbrough, O, S., & Laing, D, J. (1995). On automated discovery of models using genetic programming: Bargaining in a three-agent coalitions game. Journal of Management Information Systems, 12(3), 97.

Elitzur, R., & Wensley, A. (1997). Game theory as a tool for understanding information services outsourcing. Journal of Information Technology (Routledge, Ltd.), 12(1), 45-60.

Finne, T. (1998). The three categories of decision-making and information security. Computers & Security, 17(5), 397.

Gal-Or, E., & Ghose, A. (2005). The economic incentives for sharing security information. Information Systems Research, 16(2), 186-208.

Gates, W. R., & Nissen, M. E. (2001). Designing agent-based electronic employment markets. Electronic Commerce Research, 1(3), 239.

Geoffrion, A. M., & Krishnan, R. (2003). E-business and management science: Mutual impacts (part 1 of 2). Management Science, 49(10), 1275.

Geoffrion, A. M., & Krishnan, R. (2003). E-business and management science: Mutual impacts (part 2 of 2). Management Science, 49(11), 1445.

Gmytrasiewicz, P., & Parsons, S. S. (2005). Editorial: Decision Theory and Game Theory in Agent Design. Decision Support System, 39 (2), 151.

Guarnaschelli, S., Kwasnica, A. M., & Plott, C. R. (2003). Information aggregation in double auctions: Rational expectations and the winner's curse. Information Systems Frontiers, 5(1), 63.

He, M., & Leung, H. (2002). Agents in E-commerce: State of the art. Knowledge and Information Systems, 4(3), 257.

Jain, S., & Kannan, P. K. (2002). Pricing of information products on online servers: Issues, models, and analysis. Management Science, 48(9), 1123.

Jarvenpaa, S. J., & Leidner, D. E. (1998). An information company in mexico: Extending the resource-based view of the firm to a developing country. Information Systems Research, 9(4), 342-361.

Jarvenpaa, S. L., Knoll, K., & Leidner, D. E. (1998). Is anybody out there? antecedents of trust in global virtual teams. Journal of Management Information Systems, 14(4), 29.

Jarvenpaa, S. L., & Leidner, D. E. (1999). Communication and trust in global virtual teams. Organization Science, 10(6), 791.

Kontolemakis, G., Kanellis, P., & Martakos, D. (2004). Software agents for electronic marketplaces: Current and future research directions. JITTA : Journal of Information Technology Theory and Application, 6(1), 43.

Koumpis, A. (1997). Situation room analysis in the information technologies market. Communications of the ACM, 40(3), 90-92.

Lai-Huat Lim, & Benbasat, I. (1992). A theoretical perspective of negotiation support systems. Journal of Management Information Systems, 9(3), 27.

Leidner, E, D., & Jarvenpaa, L, S. (1995). The use of information technology to enhance management school education: A theoretical view. MIS Quarterly, 19(3), 265.

Leidner, E, D., & Jarvenpaa, L, S. (1993). The information age confronts education: Case studies on electronic classrooms. Information Systems Research, 4(1), 24.

Lim, Lai-Huat, & Benbasat, Izak. (1992). A theoretical perspective of negotiation support systems. Journal of Management Information Systems, 9(3), 27.

Lin, L., Geng, X., & Whinston, A. B. (2005). A sender-receiver framework for knowledge Transfer1. MIS Quarterly, 29(2), 197.

Loebecke, C., Fenema, P. C. V., & Powell, P. (1999). Co-opetition and knowledge transfer. Database for Advances in Information Systems, 30(2), 14.

Mayer, I., Jong, M. d., & Surname, F. (2004). Combining GDSS and gaming for decision support. Group Decision and Negotiation, 13(3), 223.

McCreary, Lew, Koch, Christopher, Blodgett, Mindy et al. (1997). Five uneasy pieces. CIO, 11(4), 34.

Melville, N., Kraemer, K., & Gurbaxani, V. (2004). Review: Information technology and organizational performance: An integrative model of it business Value1. MIS Quarterly, 28(2), 283.

Nault, B. R., & Vandenbosch, M. B. (2000). Research report: Disruptive technologies - explaining entry in next generation information technology markets. Information Systems Research, 11(3), 304.

Nunamaker Jr., J. F., & Sprague Jr., R. H. (1992). Collaboration technology, modeling, and end-user computing for the 1990s. Journal of Management Information Systems, 9(3), 3.

Oh, J. C. (2005). Emergence of cooperative internet server sharing among internet search agents caught in the n-person prisoner's dilemma game. Knowledge and Information Systems, 7(1), 23.

Oliver, J. R. (1996). A machine-learning approach to automated negotiation and prospects for electronic commerce. Journal of Management Information Systems, 13(3), 83.

Orlikowski, W. J. (2002). Knowing in practice: Enacting a collective capability in distributed organizing. Organization Science, 13(3), 249.

Orlikowski, J, W., & Hofman, Debra, J. (1997). An improvisational model for change management: The case of groupware technologies. Sloan Management Review, 38(2), 11.

Post, V, G., Kagan, Albert, & Lau, Kin-Nam. (1995). A modeling approach to evaluating strategic uses of information technology. Journal of Management Information Systems, 12(2), 161.

Raghu, T. S., Jayaraman, B., & Rao, H. R. (2004). Toward an integration of agent- and activity-centric approaches in organizational process modeling: Incorporating incentive mechanisms. Information Systems Research, 15(4), 316.

Rangaswamy, A., & Shell, G. R. (1997). Using computers to realize joint gains in negotiations: Toward an "electronic bargaining table". Management Science, 43(8), 1147.

Spender, J. C. (2003). Exploring uncertainty and emotion in the knowledge-based theory of the firm. Information Technology & People, 16(3), 266.

Sulin Ba, Stallaert, J., Whinston, A. B., & Han Zhang. (2005). Choice of transaction channels: The effects of product characteristics on market evolution. Journal of Management Information Systems, 21(4), 173-197.

Talluri, S., & Baker, R. C. (2002). A multi-phase mathematics programming approach for effective supply chain design. European Journal of Operational Research, 141(3), 544-558.

Tu, Y., & Lu, M. (2005). Peer-and-self assessment to reveal the ranking of each individual's contribution to a group project. Journal of Information Systems Education, 16(2), 197.

Vazsonyi, A. (1976). The calculus of information. Interfaces, 6(4), 90-95.

Yates, J., & Orlikowski, W. (2002). Genre systems: Structuring interaction through communication norms. The Journal of Business Communication, 39(1), 13.

Yates, Joanne, & Orlikowski, J, W. (1992). Genres of organizational communication: A structurational approach to studying communication and media. Academy of Management.the Academy of Management Review, 17(2), 299.

Yates, JoAnne, Orlikowski, J, W., & Okamura, Kazuo. (1999). Explicit and implicit structuring of genres in electronic communication: Reinforcement and change of social interaction. Organization Science, 10(1), 83.

Links from this theory to other theories

Decision theory

External links, Wikipedia entry on game theory, Game theory society, Game theory Web site, Introduction to game theory, Al Roth's game theory and experimental economics page, Stanford Encyclopedia of Philosophy, Social Capital Gateway description of game theory, Open Directory Project description of game theory

Original Contributor(s)

Hossam Ali-Hassan

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