John Nash, 86, is One among the genius mathematicians and a holder of Nobel in economics.His life motivated a book ‘A Beautiful Mind‘hit to win Oscar, sadly met his death in a car accident on Saturday night.Nash’s significant additions made ‘Game Theory’ on hot spot and are widely used in the firms as an innovative strategy.
Game Theory
Game Theory is a sub element of economical mathematics which was very first theorized by John Von Neumann in the era of 1930’s.It includes principle of probability in a multi user world where parallel executors (peoples) chase the probability with each other to certain the actions.
Applicable areas of Game Theory
Game Theory is extensively used in our modern research, such as to study a extensive human and animal behavior, space science, stock market , economic behavior, and even as a lethal weapon to study war strategies.
Working Principle
Game Theory includes various sub parts: Cooperative, non-cooperative, strategic games and many more.An auction is an example of non-cooperative game which includes numerous executors where each executor attaches an uncertain probability to others to react.
It’s better explained through the game of chess. A player makes his moves by pre-assuming the reaction of the opponent. Every strategy and tactics is established on presumption (incomplete info.), these is also termed as a ‘Mixed Probability’ in the world of mathematics.
Example of using Game Theoretic tools as their primary united strategy by an Indian Company:
Non-cooperative game theoretic strategy was reflected by an Indian Company ‘TATA STEEL’ which acquired the locus of European Steel maker in 2007. Posterior to the submission of bids, the Tata steel and North American Company were asked to join the auction to acquire the projected locus of European Steel Maker.
In the ninth round of the auction TATA steel placed a tactic by announcing that it’s going to bid five pence more than whatever the North American Company is going to bid.
TATA steel pre-assumed that the North American Company is not going to bid at extra ordinary levels making a huge difference, as the TATA steel will always be five pence more than the competitor.
This was the probability of assuming a negligible bid beyond a certain point of the bid by the competitor. And it was converted to a pre-assumed plan. Probabilities made by the Indian company were the factorial analysis of financial and the reactions of competitor during the process of auction.
Intentions of Facebook behind the acquisition of whatsapp last year:
Facebook decided to buy Whatsapp in a hefty amount is probably a self-seeking plan to become a Hercules in the arena of mobile internet as the whatsapp is publicized as a next titan of the social networking. Viber, Hike, Wechat are also some of the twigs of whatsapp, are also capable of bringing down some attenuation.
In the area of SMS
It was disagreeable for the Facebook that its emerging sibling is changing the dimensions of social communication. Whatsapp holds 450 million users worldwide, 10% of which is in India. Now, the deal convinced between facebook and whatsapp, that Facebook was allowed to use the mobile ad technology and can accumulate the Advertisers audiences both social networking aswell as messaging.
Explanation of Facebook’s affiliation to purchase Whatsapp in terms of Game Theory:
The elementary logic of Facebook was to limit and hold the market of rival in a certain amount. It’s also was in discussions that worlds greatest search engine Google was also intending to buy Whatsapp and bid $10 billion belonging whatsapp, approximately 50% of Facebook’s offer. Later reports conclude that Google heightened the offer for Whatsapp and eventually came to know how much Facebook can compensate for the throne of messaging. This explains the Game Theory of making themselves out of reach.
