Agora Media Group Innovation Blog

When thinking about Game Theory and Social Media, key words coming to my mind are Social Network Analysis, Quantification, Tranparency, Centralisation, Asymmetric Information etc.
It are two paths that cross each other on the basis of the Internet and Economics.

How are these two enhancing Strategic decision making on a business level?
First of all, a short introduction to Game Theory:

Game theory is a branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in biology (most notably evolutionary biology and ecology), engineering, political science, international relations, computer science, and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, in which an individual’s success in making choices depends on the choices of others. While initially developed to analyze competitions in which one individual does better at another’s expense (zero sum games), it has been expanded to treat a wide class of interactions, which are classified according to several criteria. Today, “game theory is a sort of umbrella or ‘unified field’ theory for the rational side of social science, where ‘social’ is interpreted broadly, to include human as well as non-human players (computers, animals, plants)” (Aumann 1987).

When we talk about Social Media, Transparency and Centralisation are key to new social (digital) behavior which influences buying cycles and decision making and where Social Network Analysis gives insights in relationships between (groups of) people.

On the Internet, where quantification on a much more granular level is made possible, and where Assymetric Information supply is being diminished, we can understand that Game Theory is an intersection of all these disciplines which will benefit the business and its strategic decision making. Where the new Local = Global, where competition increases, mathematics like Game Theory will give (large) corporations the advantages to extract important information from its customers and markets.

Why?
Because like the definition says, “Game theory attempts to mathematically capture behavior in strategic situations, in which an individual’s success in making choices depends on the choices of others.”
An individual can be understood on different levels, be it a business, a target segment or indeed individual people.

The Internet’s real-time aspect which is challenging -again- businesses will add a new dimension to the already exisiting complexity.
(Not-)Reacting on events can be a matter of days and substantiated decision making -on quantified data- becomes a must.

How do you think mathematical approaches like Game Theory and Social Network Analysis will influence businesses and decision making?
How will competition evolve amongst companies?