Corporate Decision-making Behavior Based On Game Theory

Firm Decision Behavior : A Game Theory ViewYong LiSchool of Management, Zhejiang University AbstractThe effectiveness of game theory as a research method hi strategic management has been questioned. Although evolutionary game theory has providede a useful theoretical foundation in explaining human economic behavior under bounded rationality, there is little empirical study in stratepic management. Based on a literature review about stratigec management, game theory, and industry organization theory, this study attemped to empirically explore these relationships among rationality in firm decision behavior, industry characteristics, and firm performance. Research interview, case study, and questionnaire were applied. The main conclusion drawn from this study are as follows:1. The two dimentions of firm decision behavior rationality are individual rationality and interactive rationality. Individual rationality consists of decision program rationality7, decision goal rationality, decision competition rationality, and decision respondence rationality. Interactive rationality consists of variation of rationality, trust of rationality, and agreement of rationality. The degree of individual rationality is high, and the degree of interactive rationality is low.2. The decision program rationality and decision goal rationality of state firm isolower than joint (foreign) venture firm. The decision goal rationality of the firm in restart-untertaking stage is lower than firm in adult and development stage. The decision goal rationality' of market leader and market challenger is higher than market follower. Market leader's variation of rationality larger than others'.3. There is correlate relationship between some components of industry characteristics and some components of firm decision behavior rationality, but the casual relationship between them is not obvious.4. There is very obvious casual relationship between firm decision behavior rationality and firm performance. Among the components of individual rationality, firm performance is mainly influenced by decision goal rationality. Among the components of interactive rationality, firm performance is mainly influenced by variation of rationality5. There is very obvious casual relationship between industry characteristics and firm performance. Firm's contextual performance is mainly influenced by concentration of market, industry profit, and marketing stress. Firm's operation performance is mainly influnced by size of market and specific technology.