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 is the chaos theory?
The chaos theory is a complicated and disputed mathematical theory that seeks to explain the effect of seemingly insignificant ... 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 is capital structure theory?
Discover capital structure theory as it relates to financial management and the methods in which companies attempt to raise ... 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 >>

Insights
Prisoner's Dilemma
Learn more about this classic game theory scenario. 
Insights
The Basics Of Game Theory
Break down and examine the potential consequences of economic/financial scenarios. 
Tech
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. 
Tech
How The Video Game Industry Is Changing
Video game creation has become increasingly complex, and the cost of creating a game to run on one of the major consoles has risen with this greater complexity. 
Investing
7 Controversial Investing Theories
We take a closer look at the theories that attempt to explain and influence the market. 
Tech
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, ... 
Trading
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
What is a ZeroSum Game?
A zerosum game is a situation in which one personâ€™s gain equals anotherâ€™s loss, resulting in a net benefit of zero. 
Insights
5 Nobel PrizeWinning Economic Theories You Should Know About
Here are 5 prizewinning economic theories that youâ€™ll want to be familiar with. 
Tech
Are Big Budget Video Games Dead?
More people seem to be gaming on tablets and smartphones over consoles, which means this could be the end of big budget console games.

Decision Theory
An interdisciplinary approach to determine how decisions are ... 
Game Theory
A model of optimality taking into consideration not only benefits ... 
Gaming Industry ETF
A sector exchangetraded fund that invests solely in gaming companies, ... 
Biased Expectations Theory
A theory that the future value of interest rates is equal to ... 
Demand Theory
A theory relating to the relationship between consumer demand ... 
Nash Equilibrium
A concept of game theory where the optimal outcome of a game ...