Game theory was once hailed as a revolutionary interdisciplinary phenomenon bringing together psychology, mathematics, philosophy and an extensive mix of other academic areas. Eight Noble Prizes have been awarded to those who have progressed the discipline; but beyond the academic level, is game theory actually applicable in today's world?
Yes!
The classical example of game theory in the business world arises when analyzing an economic environment characterized by an oligopoly. Competitive firms are faced with a decision matrix similar to that of a Prisoner's Dilemma. Each firm has the option to accept the basic pricing structure agreed upon by the other companies or to introduce a lower price schedule. Despite that it is in the common interest to cooperate with the competitors, following a logical thought process causes the firms to default. As a result everyone is worse off. Although this is a fairly basic scenario, decision analysis has influenced the general business environment and is a prime factor in the use of compliance contracts.
Game theory has branched out to encompass many other business disciplines. From optimal marketing campaign strategies, to waging war decisions, ideal auction tactics and voting styles, game theory provides a hypothetical framework with material implications. For example, pharmaceutical companies consistently face decisions regarding whether to market a product immediately and gain a competitive edge over rival firms, or prolong the testing period of the drug; if a bankrupt company is being liquidated and its assets auctioned off, what is the ideal approach for the auction; what is the best way to structure proxy voting schedules? Since these decisions involve numerous parties, game theory provides the base for rational decision making.
Another important concept, zerosum games, also stemmed from the original ideas presented in game theory and the Nash Equilibrium. Essentially, any quantifiable gains by one party are equal to the losses of another party. Swaps, forwards, options and other financial instruments are often described as "zerosum" instruments, taking their roots from a concept that now seems distant. (For an in depth explanation about game theory, check out Game Theory: Beyond the Basics.)
This question was answered by Arthur Pinkasovitch.

What's the difference between agency theory and stakeholder theory?
Learn how agency theory and stakeholder theory are used in business to understand common business communication problems ... Read Answer >> 
How is game theory related to the Nash equilibrium?
Learn how Nash's equilibrium is an important concept in game theory, and understand how it applies to the common prisoner's ... Read Answer >> 
What are the differences between weak, strong and semistrong versions of the Efficient ...
Discover how the efficient market theory is broken down into three versions, the hallmarks of each and the anomalies that ... Read Answer >> 
What does the Nash equilibrium predict?
Learn more about the famous Nash equilibrium, which is the revolutionary concept in game theory about the economics of human ... Read Answer >> 
Does the tradeoff model or the pecking order play a greater role in capital budgeting?
Understand the difference between the tradeoff theory and the pecking order theory, and learn what these theories tell companies ... Read Answer >> 
What is the difference between a dominant strategy solution and a Nash equilibrium ...
Dive into game theory and the Nash equilibrium, and learn why the Nash equilibrium assumptions about information are less ... Read Answer >>

Economics
Prisoner's Dilemma
Learn more about this classic game theory scenario. 
Investing
How To Game The Video Game Industry
Investopedia explores the business, current developments, future trends of video games industry and how the overall industry makes money. 
Investing
You Love Video Games, But Do You Know How The Industry Works?
Traditionally, the video game industry was limited to consoles, such as Microsoftâ€™s (MSFT) Xbox and Sonyâ€™s (SNE) PlayStation, but it now includes PC games, mobile games and, in the near future, ... 
Economics
The Nash Equilibrium
Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ... 
Investing Basics
Can Games Make You A Better Investor?
As investing is a great example of an activity that draws on a wide range of mental and emotional skills, it is worth exploring how to improve this skill set. 
Investing
Power Up Your Portfolio With Video Game Stocks
Level up your winnings by investing in this fastpaced, highly skilled industry. 
Active Trading Fundamentals
Dow Theory: Current Relevance
By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.comThere is little doubt that Dow theory is of major importance in the history of technical analysis. Many of its tenets and ... 
Stock Analysis
Electronic Gaming Is Still Red Hot
When it comes to spending our leisure dollars, more and more of them are going towards video games and electronic entertainment. And with that fact in tow, investors may want bet on the discretionary ... 
Investing Basics
3 Ways Companies Profit From Virtual Goods
A report released in late 2011 predicts that the market for virtual goods will reach $2.9 billion this year. 
Investing
Top 10 Biggest Mobile Apps Of 2015
The biggest mobile apps include games and social networking services.

ZeroSum Game
A situation in which one personâ€™s gain is equivalent to anotherâ€™s ... 
Decision Theory
An interdisciplinary approach to determine how decisions are ... 
Dow Theory
A theory which says the market is in an upward trend if one of ... 
Contract Theory
The study of how individuals and businesses construct and develop ... 
Mechanism Design Theory
An economic theory that seeks to determine the situations in ... 
Neoclassical Growth Theory
An economic theory that outlines how a steady economic growth ...