Thinking Strategically

How do businesses make smart decisions, especially when they are competing against other businesses that offer similar products? Are professional poker players just really lucky, or is there a skill they have that gives them an advantage over other players? A field of economics, known as game theory, is what is at play in answering both of these questions. Game theory is a relatively new field of economics, finding its roots in the 1940s. Game theory is all about thinking about what your opponent may or may not do, and choosing your best options based on what you think they are going to do.  To get an introduction into game theory, which can be quite confusing for someone who has never delved into it before, I recommend reading,Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life (Norton Paperback). Avinash Dixit and Barry Nalebuff do a fantastic job of introducing us to game theory, in a way that wont really hurt your brain. They provide great real life applications for each of the topics they discuss that really hammer the ideas down and make them easy to comprehend. Overall, a great introduction into the world of game theory and strategic thinking that could up your decision-making skills for when you really need it.

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