The Uses of Game Theory in Management Science

Since the war, there has been a great growth in interest in the theory of organization. The size of many modern organizations has brought to the surface problems of communication and decision-making of a very different nature to those confronted by smaller groups. A large organization appears to be both quantitatively and qualitatively different from a small one. Information flows and decisions that could be comfortably handled by one “jack-of-all-trades” executive in a small organization or in a dictatorial system, where wastage may be no problem, must be broken down and handled by many specialists. In many cases they may never reach the one-man decision level but are finally acted upon by groups. The need to understand these vital processes of decision-making has impelled us to lay emphasis upon the gathering and study of information, the evaluation of goals, and the role of the individual decision-maker.

The new methods of game theory appear to provide an important approach to many of the problems of decision-making. In this survey of areas of application of game theory some problems which have been completely formulated, solved, and are of immediate practical value have been discussed in Sections 4 and 5. However, for those interested in the deeper and more important long-range problems which confront the researcher in the behavioral sciences, Section 6 indicates where some of the work of yesterday has taken place and where much of the work of tomorrow must lie.