Strategic Management - Strategies in Game Theory

strategic management

Strategies in game theoryIn game theory, a strategy refers to one of the options that a player can choose. That is, every player in a non-cooperative game has a set of possible strategies, and must choose one of the choices.

A strategy must specify what action will happen in each contingent state of the game--e.g. if the opponent does A, then take action B, whereas if the opponent does C, take action D.

Strategies in game theory may be random (mixed) or deterministic (pure). That is, in some games, players choose mixed strategies. Pure strategies can be thought of as a special case of mixed strategies, in which only probabilities 0 or 1 are assigned to actions.

Strategy based games all have a similar objective where the player thinks through a sequence of solutions to determine the preferred favorite in order to defeat the opponent. Chess is a common strategy game played throughout the world.

[edit] Noted texts on strategyClassic texts such as Chanakya's Arthashastra written in the 3rd century BC, Sun Tzu's The Art of War, written in China 2,500 years ago, the political strategy of Niccolò Machiavelli's The Prince, written in 1513, or Carl von Clausewitz's On War, published in 1832, as with the Japanese classic The book of five rings by Miyamoto Mushashi written in 1645, are still well known, and highly influential. Even though the term was not used before the end of the 18th century, and subsequently shifted its meaning (see definitions, above), there were several insightful writers on strategy between Machiavelli and Clausewitz, like Matthew Sutcliffe, Bernardino de Mendoza, Santa Cruz de Marcenado (Álvaro de Navia Osorio y Vigil, marqués de Santa Cruz de Marcenado), Guibert (Jacques Antoine Hippolyte, Comte de Guibert), and August Otto Rühle von Lilienstern. In the 20th century, the subject of strategic management has been particularly applied to organizations, most typically to business firms and corporations.

The nature of historic texts differs greatly from area to area, and given the nature of strategy itself, there are some potential parallels between various forms of strategy--noting, for example, the popularity of The Art of War as a business book. Each domain generally has its own foundational texts, as well as more recent contributions to new applications of strategy. Some of these are:

Political strategy

The Prince, published in 1532 by Niccolò Machiavelli

Arthashastra, written in the 4th century BC by Chanakya

The Book of the Courtier by Baldassare Castiglione

Military strategy:

The Art of War, written in the 6th century BC by Sun Tzu

The Art of War, by Niccolò Machiavelli

The Art of War, written in the 19th century AD by Baron Antoine-Henri Jomini

The Book of Five Rings, written in the 17th century AD by Miyamoto Musashi

Strategikon, written in the 6th century AD by the Byzantine emperor Maurice

Taktikon, by the Byzantine emperor Leo VI the Wise

Reflexiones Militares by Santa Cruz de Marcenado

Essai général de la Tactique by Guibert (Jacques Antoine Hippolyte, Comte de Guibert)

On War, by Carl von Clausewitz (19th century)

On Thermonuclear War, by Herman Kahn

Strategy, by B.H. Liddell Hart

On Guerrilla Warfare, by Mao Zedong