Game theory
Taught by Ben Wilson · AI tutor support included
In this 12-minute lesson, you'll learn how game theory shapes competitive strategy and decision-making in business. Game theory explores how your actions and those of competitors influence each other — you don't operate in isolation.
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In this lesson
- 0:00 Welcome to Game Theory
- 0:19 Why Game Theory Matters in Business
- 1:15 The Prisoner's Dilemma Explained
- 3:51 Why Both Parties Confess
- 5:19 Competitor Response Strategies
- 7:26 How Competitors Influence Your Strategy
- 8:04 Win-Win and Win-Lose Outcomes
- 9:41 Loss-Leader Strategy in Practice
- 11:01 Exam Question: Identifying Competitor Types
About this lesson
Understanding this concept is essential for Strategic Business Leader (SBL) and other strategy-focused papers, where you'll need to anticipate competitor reactions and adjust your approach accordingly. The lesson starts with the classic Prisoner's Dilemma to illustrate the core principle: your decisions depend not just on what's best for you, but on what you think others will do. You'll then explore four competitor response types — tiger (always aggressive), laid-back (ignores rivals), selective (responds only to genuine threats), and stochastic (unpredictable) — and see how recognising which type you face changes your strategy. Finally, you'll examine four strategic outcomes: win-win (collaboration), win-lose (you succeed, competitor fails), lose-win (avoid this), and lose-lose (short-term tactic, long-term risk). The lesson closes with an exam-style question to test your ability to classify competitor behaviour and apply game theory thinking to real business scenarios.
Duration: 12m
Transcript
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