What is Game Theory? 

Game Theory is a mathematical study of decision-making related to conflicts and various strategies that occurs in many social situations. The Game Theory with negotiation helps you in eliminating the inferior options and keeping the best options. The Prisoner’s Dilemma and Tit for Tat have emerged as the two-game theory strategies. Here, the organizations who are indulged in game theory need to understand the actions of their competitors too and frame strategies accordingly. The negotiation here settles the differences between the two players where they can reach an agreement mutually instead one player winning and another losing.

A few assumptions involved in this Game Theory are:

  • When parties are entirely rational like maximizing their utility, players are aware of the rules of the game, players only accept the higher payoffs, etc.
  • Players number is fixed and known to everyone
  • The players have to make tangible preferences amongst the available options. Here, the choices will remain constant during the negotiation or the conflicts.
  • The parties to the game theory can estimate the preferences and options of the other parties.
  • Here the communication is controlled and limited and is not even relevant to the negotiation or the conflict.
  • With the negotiation in Game Theory, one can reach up to the maximum efficient decision.

Information Theory and Negotiation

Claude Shannon initially devised the Information Theory in which he wanted to find out ways to communicate and communicate data operations. This theory studies the quantity of information, its storage, and communicating it to others. Its crucial measure also involves “Entropy” that states about the amount of uncertainty involved with the random variables and the outcome through a random process. 

The negotiation can be used while the people are competing in the volatile markets and must target the different deals that are lucrative and can get the maximum information about the special deal. Even an arbitration process also takes place between the two parties by communicating their thoughts through digital channels. It will help in resolving the dispute, and even a third party can get involved to reach out to a deadlock.  

Moreover, the communication takes place only when the encoder and the decoder involved in the communication process had a prior agreement on it. Even the messages send under this Information Theory sends and receives the messages in a sequenced format that supports the negotiation seamlessly.


Overall, for reaching out to a standard conclusion between the players in the Game Theory and communicators in the Information Theory, the negotiation plays a vital role. It not only resolves any conflicts but also helps the two parties involved in the dialog to reach out to a conclusion. 

Moreover, negotiation helps in clarifying the goals between the two parties, focusing on talk to get a win-win situation, and after understanding each other’s viewpoint coming to a great outcome that is worthy for both the parties. In any case, if negotiation fails then it can be re-scheduled after some time.

Want to learn more about game theory and negotiation? Join our Art of Negotiation workshop this September! 

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