Advantages and limitations of game theory, Managerial Accounting

Advantages and limitations of game theory

Advantage:

Game theory helps us to learn how to approach and understand a conflict situation and to improve the decision making process.

Limitations:

1) Businessmen do not have all the information needed by the theory of games. Most often they do not know all the strategies available to them, nor do they know all the strategies available to their rivals.

2) There is a huge deal of uncertainty. Hence we usually restrict ourselves to those games with known outcomes.

3) The implications of the minima strategy is that the businessman minimizes the chance of maximum loss. For an ambitious businessman, this strategy is very conservative.

4) The techniques of solving games involving mixed strategies where pay-off matrices are rather large, is very complicated.

5) In non-zero sum games, mathematical answers are not always possible. For example, a reduction in the price of commodity may increase overall demand. It is also not necessary that demand units will shift from one firm to another.

Posted Date: 12/8/2012 4:19:36 AM | Location : United States







Related Discussions:- Advantages and limitations of game theory, Assignment Help, Ask Question on Advantages and limitations of game theory, Get Answer, Expert's Help, Advantages and limitations of game theory Discussions

Write discussion on Advantages and limitations of game theory
Your posts are moderated
Related Questions
Hi there, i am looking an expert to make my assignments for this subject and i do have other subjects as well. Let me know how you can go through my assignment.

5 application areas of linear programing in management accounting

Factory Layout The first stage of implementing the JIT manufacturing techniques is to rearrange the factory floor away from the batch production functional layout towards a pro

Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion

What is Cost unit While the cost centres assists in ascertaining costs by location, person, equipment, operation or process, cost unit is a unit of product, service or a combin

Give the following cost data Costs /per unit labor … $ 4 Materials …5 Fixed cost … $ 12000 Determine the break even point in units if the selling price is $ 19.00 Determine th

The other source of spontaneous short-term financing is the accrued expenses which arise by the general conduct of business. An accrued expense is an expense which has been incurre

The standard cost of chemical mixture ~ PQ’ is as follows: 40% of material P @ Rs. 400 per kg. 60% of material Q @ Rs. 600 per kg. A standard loss of 10% is normally anticipated in

The significant objectives of short-term cash forecast are as given: find out operating cash requirement anticipating short term financing Organization investment of

Problem Marginal costing plays a major role in making certain decisions. It provides information to management regarding the behaviour of costs and the incidence of such costs