Application of the Game Theory in a Perfectly Competitive Market

Applicationof the Game Theory in a Perfectly Competitive Market

Applicationof the Game Theory in a Perfectly Competitive Market

Althoughit is true that the game theory has been in use for many years, ithas some limitations that prevent its application in a PerfectlyCompetitive Market. For example, the game theory has differentvariables, some of which are difficult to account for. One of thesevariables is the X-factor, which is difficult to explain how itaffects the ultimate strategy (Scheve, 2015). Moreover, the gametheory does not provide businesses with a single solution, which mayconfuse the management at times (Lianju &amp Luyan, 2011). Themarket and its behavior are characterized by multiple strategicsolutions, which are difficult to summarize using the game theory(Vinay, 2014). Therefore, the game theory should not be used in theperfectly competitive markets.

Threeattributes of the successful organization

Trust,loyalty, and consistency are the major attributes of any organizationthat can be considered to be successful. Trust is critical for asuccessful organization because the stakeholders, especiallycustomers, who trust the organization, are likely to remain loyal toit (Sarwar, Abbasi &amp Pervaiz, 2012). Consistency, on the otherhand, influences the success of the organization by protectingcustomers from unnecessary surprises. There are very few customers,if any, who would be pleased with unexpected change in the price andthe image of their favorite brand (Bickle, 2012). Consistency helpsthe organization in establishing its identity and improves itsrecognition by customers. Loyalty is also needed for the success ofthe organization because loyal customers give the organization someguarantee that it will sell some commodities even during the lowseason (Nguyen, Leclerc &amp Leblanc, 2013). This protects the goingconcern of the organization and increases its competitiveness.

References

Bickle,M. (2012). Threeattributes of enormously successful companies.London: Forbes.

Scheve,T. (2015). How game theory works. InforSpaceLLC.Retrieved July 20, 2015, fromhttp://science.howstuffworks.com/game-theory7.htm

Lianju,S. &amp Luyan, P. (2011). Game theory analysis of the briberybehavior. InternationalJournal of Business and Social Science,2 (8), 104-107.

Nguyen,N., Leclerc, A., &amp Leblanc, G. (2013). The mediating role ofcustomer trust on customer loyalty. Journalof Service Science and Management,6 (6), 96-109.

Sarwar,M., Abbasi, K., &amp Pervaiz, S. (2012). The effect of customerstrust loyalty and customers retention: A moderating role of causerelated marketing. GlobalJournal of Management and Business Research,12 (6), 1-12.

Vinay,E. (2014). Advantages and limitations of the game theory. UniversalTeachers Publications.Retrieved July 20, 2015, fromhttp://www.universalteacherpublications.com/univ/ebooks/or/Ch9/limit.htm