Question

A partnership with 5 partners is operating a shoe factory and retail outlets in 5 big cities. The demand of the firm's products had increased considerably but it doesn't have the capacity to produce demanded quantity. For expanding it's operations the firm needs more capital, manpower and machine. For this firm can admit new partners or convert partnership into public limited company. Which alternate will you suggest and why?

Answer 1

Game theory is a kind of decision theory in which one's alternative action is determined after taking into consideration all possible alternatives available to an opponent playing the similar game, rather than just by the possibilities of various outcome results. Game theory does not insist on how a game must be played but tells the process and principles by which a particular action should be chosen. Therefore it is a decision theory helpful in competitive conditions.

Game is defined as an activity among two or more persons as per a set of rules at the end of which each person gets some benefit or bears loss. The set of rules and procedures defines the game. Going with the set of rules and procedures once by the participants defines the play.