Games of strategy, with examples

Meaning. A game of strategy is a situation in which what one decision maker gets depends not only on her own choice but also on the choices of others, so that each must take account of how the others are likely to act before she decides. Each player is assumed to be rational: she weighs her preferences, constraints and objectives before she chooses. It differs from a game of pure chance, such as tossing a coin, where thinking about the other side makes no difference.

Elements of a game of strategy. Every such game has players (the decision makers), strategies (the plans of action open to each) and payoffs (the gain or loss each receives at the end, in money or otherwise).

Examples. The examples are our own.

1. Two neighbouring sweet shops before Diwali. Each must decide whether to cut prices. A cut wins customers only if the other shop does not cut as well, so each shop's profit depends on what the other does.
2. Two mobile network companies. Each decides whether to launch a cheaper data plan while guessing the rival's response. If both cut, both may earn less than if neither had.
3. A bowler and a batter in cricket. The bowler chooses where to pitch the ball while judging what the batter expects, and the batter sets himself by judging what the bowler will do.

Conclusion. A game of strategy is any interaction in which each participant's result depends on the actions of the others as well as her own. It arises in business and everyday life, as well as in sport.