Open Access
Journal Article
Decision Analysis and Game Theory in Operations Research
by
Sarah Anderson
ORS 2020 2(1):6; 10.69610/j.ors.20200223 - 23 February 2020
Abstract
The paper delves into the intersection of Decision Analysis and Game Theory within the domain of Operations Research. Decision Analysis offers structured approaches to making decisions under uncertainty, while Game Theory provides frameworks for understanding strategic interactions among multiple players. The study examines how these two disciplines can be synergistically appli
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The paper delves into the intersection of Decision Analysis and Game Theory within the domain of Operations Research. Decision Analysis offers structured approaches to making decisions under uncertainty, while Game Theory provides frameworks for understanding strategic interactions among multiple players. The study examines how these two disciplines can be synergistically applied in operational settings. We explore various decision analysis techniques such as the Expected Value with Perfect Information (EVPI), the Expected Utility model, and Sensitivity Analysis in the context of competitive environments. Game Theory, on the other hand, is used to analyze the strategic interplay between decision-makers, including concepts like Nash Equilibrium, Dominant Strategies, and Subgame Perfect Equilibrium. The integration of these tools is demonstrated through case studies in supply chain management, project scheduling, and competitive pricing. The findings highlight the importance of considering both the strategic behavior of stakeholders and the uncertainty inherent in operational decisions. This synthesis provides a comprehensive view of how Operations Research can be enhanced by the combined application of Decision Analysis and Game Theory.