Duopoly Price Competition Game Model Co., Ltd. Effectiveness Of The Decision-making Mechanisms

Game Theory, also named Decision Theory, was created by John von Neumann at 1928. Since then, It has been over seventy years old. The theory is mainly used to solve the strategic problem of two interactive individuals that one must make a choice while he cannot know the other's choice, and to test the payoff of their choices, and to get equilibrium. The author hold the view that it is possible for us to make the use of the theory to research on the Law of Corporations, because every corporation must choose the best strategy for itself, while all bodies in a corporation choosing for themselves.The author discusses effectiveness of the decision-making system of the stock corporation that was established by the Corporation Act by the means of monopolists' price competition. This game, a kind of prisoners' dilemma game, is used to explain the price competition that cannot be explained by traditional economists. They believed that two competitors would reach an agreement to get more profits, but on the contrary, game theorists proved that both of the competitors would choose the cheaper price of their commodities to maintain or expand their market portion.The decision of one competitor is related with another's. In monopolists' price competition, both of them maybe have more than one strategy, but according to the game theory they have no choice except the lower price. If they must make the same decision at last, then we have an objective rule to testify what is the good law. It is well known that the corporation should be beneficial for all shareholders, employees, managers, and directors. To get more profits, every body has his/her own preference of decision, and it is impossible for them to have the same preference. How does the corporation, one of the game players, prefer one choice to others under the provisions of the Corporation Act? Is the choice chosen by the corporation the same as the choice proved by the game theory? If yes, how to protect the interest of the person who prefer other choices? If not, how do we perfect our Act?This thesis consists of six parts including the introduction and theconclusion.The first part is the introduction, which introduces the history that the game theory was used to analyze the law, and the possibility to analyze the law of corporations.The second part presents the monopolists' price competition, and this game is one of hypotheses of the paper.The third part presents the making-decision system of the Corporation Act or the amendments of the Corporation Act as the second hypothesis of the paper.The forth part focuses on the choice preference of the employees and the shareholders.The fifth part analyses the factors affecting the preference of trustees.In the last part, the author points out the deviation between the choice according to the game theory and the actually legal choice, and gives some advices to correct it.