application of the game theory

소개글

application of the game theory - case study on salary negotiation

목차

1. Introduction
2. Salary negotiation
2.1 Situation analysis
2.2 Assumption
2.3 Problem setting
3. Problem solving
3.1 Denotation
3.2 perfect information
3.3 Imperfect information
4. Conclusion

본문내용

1. Introduction
Human lives are made of choices. People make decision every second or every minute, such as yes or no, what to eat and what to study. Then, how can we make decisions in order to get the best outcomes? We can apply game theory in the situation.
Game Theory is a misnomer for Multi-person Decision Theory, the analysis of situations in which payoffs to agents depend on the behavior of other agents. It involves the analysis of conflict, cooperation, and (tacit) communication. It is a branch of applied mathematics that is used in the social sciences, most notably in economics, and attempts to mathematically capture behavior in strategic situations, in which an individual’s success in making choices depends on the choices of others.

2. Salary negotiation
2.1 Situation analysis
These days, many people are having a hard time to get a job due to depression of world economy. Even if they get chances to get in, it is difficult to get salary that they desire. To get a level of salary employees want could be a game they play with companies. Employees suggest amount of salary they wish for and companies accept or reject the price for a job. Therefore, it is very important for employees to suggest right price to employers to hire them.
In general, employees do not know how much money their companies willing to pay in most cases. However, companies are usually aware of exact amount of salary they can afford to pay. In other words, there are asymmetric information between employers and employees. Employers have comparative advantages which suggest that employees are less likely to get the best outcomes. Then, how can employees maximize their payoff in unfavorable situation?

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