Game theory and strategic behavior Nash equilibrium is defined as a set of strategies that none of the players can

improve their payoff, given the strategies of the other participants. Since there can be more than one equilibrium case, the actual outcome of the game depends on which action occurs first. For games in which the participants keep shifting from one strategy to another, it is highly unlikely to have Nash equilibrium. The underlying meaning behind none of the players can improve their payoff, given the strategies of the other participants means there is no incentive or a relatively lesser incentive to improve ones payoff, given the others strategy.

ominant strategy! when the optimal strategy for each firm depends on the strategy selected by the other firm. "ut when one of the firms strategy does not depend on the choice made by the others, it is a dominant strategy. #hen one player has a dominant strategy, the game will always have a Nash $quilibrium as the player will always use the same and the opponent with reply with his best possible strategy. %ence, when analy&ing a game 'entering new markets, profit ma(imi&ations, loss minimi&ation)* the first step is to analy&e whether a participant has a dominant strategy. +f such a strategy e(ists, then the outcome of the game should be easily determined as the player will use the dominant strategy and other participants will use their best response. +f there is no dominant strategy, the ne(t step is to search

for other Nash equilibriums. +f there are none, it may be advisable to use advanced game theory. Thus far, the analysis of market structures has assumed that managerial decisions focus on ma(imi&ing profits. %owever, in highly competitive situations, typically in oligopolistic markets, players may adopt a risk averse strategy of assuming the worst possible outcome is as beneficial as possible, i.e. to ma(imi&e the minimum possible profits particularly works in N, . -oss avoidance rather then profit ma(imi&ation being the ob.ective, the ma(imum may not be in line with Nash equilibrium. +n all the above models, more often than not, be it a Nash equilibrium or otherwise, there is always a possibility of cooperation, cooption. %owever, in non cooperative games,

i.e. it is not possible to negotiate with other participants and enter into a kind of agreement/ like the one in the prisoners dilemma, a 0inima( strategy.