Game Theory Consulting
Game theory is the science of strategic thinking. As a branch of applied mathematics and economics, game theory is used to analyze interactive situations with two or more players whose choices are interdependent. Since interaction is present in many business problems, it has applicability to a broad range of situations.
The theory of games was first developed by John von Neumann and Oskar Morgenstern in the 1940s. In the 1950s, John Nash, the subject of the Oscar-winning movie A Beautiful Mind, transformed game theory into a more general tool that enabled the analysis of win-win and lose-lose scenarios, as well as win-lose situations.
The successful use of game theory as a consulting service to address interactive business problems is more recent. Early consulting applications were too simplistic, too time-consuming, or too reliant on complex mathematics and black-box calculations. SGG recognized this and developed its signature, game theory consulting offering, Strategic Gaming, a practical application that gets the most out of what game theory has to offer without falling into the traps that limited the value of earlier applications. So today, smart applications of game theory are helping organizations realize significant value over more traditional consulting approaches, and SGG has been the leader in developing the field.
If you are thinking about applying game theory to a problem you face, we believe there are several factors you will want to consider in weighing the capabilities of different service providers.
Factors |
Considerations |
|---|---|
| Academic vs. Practical | With strong academic roots, game theory applications can easily become overly complex and impractical. Strong academic expertise is important, but must be coupled with a practical approach and deep, hands-on experience. |
| Black-Box vs. Transparency | Black-box applications are typical of early applications of game theory. Game theory applications have moved beyond that; techniques and recommendations can be intuitive and transparent, enabling ownership of results and effective implementation. |
Hammer vs. Toolbox |
Game-theoretic problems are rarely found in isolation; they are nearly always tightly embedded with other business issues. Consulting services must often bring to bear a breadth of capabilities, not just a gaming hammer. |
Qualitative vs. Quantitative |
Real world gaming problems typically require careful analysis of players’ individual motivations and the factors driving them. In anything beyond simple problems, applications of game theory that take qualitative short-cuts will likely sacrifice important and accurate insights, and value will be lost. |
In addition, the following diagram can help you to understand the nature of problems where game theory is most valuable
Read more about game theory.
Read more about our practical application of game theory, Strategic Gaming.