In economic reality, pure strategies are rarely used. A pure strategy is an option that must be chosen by rational decision makers because it is evidently the best option for the decision maker. Often, however, the circumstances are not so clear, especially when decisions must be made with imperfect information, as is usually the case in economic practice. <\/p>\n\n\n\n
In such cases, game theory replaces the term “uncertainty” with “probabilities” that rational decision makers use to select available options. A probability of p=0 means that an option will certainly not be chosen, while a probability of p=1 means that an option will certainly be chosen.<\/p>\n\n\n\n
With imperfect information, the spectrum of probabilities will be between p=0 and p=1, with the individual probabilities of all mutually exclusive options adding up to 1.<\/p>\n\n\n\n
Thinking strategically in terms of probabilities systematically opens up access to risks and provides clues to their probabilities of occurrence. Decision makers can adequately prepare for identified risks through mixed, anticipated response strategies. <\/p>\n\n\n\n
In this way, game theory provides an important contribution to the corporate foresight concept, an approach that helps to develop scenario-based strategies. <\/p>\n\n\n\n