S+B: Most of the examples from game theory and even the cases at business schools seem oversimplified and unrealistic.
SELTEN: They are indeed very unrealistic. Nonetheless, they provide a basis for developing good intuition precisely because they are unrealistic and simplified. If the games were as complex as reality, you couldn’t learn anything from them.
Reprint No. 05209
Matthias Hild (email@example.com) is an assistant professor of business at the University of Virginia’s Darden Graduate School of Business Administration. His Behavioral Economics Seminar (www.darden.virginia.edu/bes) showcases pathbreaking insights into managerial decision making by internationally renowned researchers from economics, psychology, and management science.
Tim Laseter (firstname.lastname@example.org) is the author of Balanced Sourcing: Cooperation and Competition in Supplier Relationships (Jossey-Bass, 1998). Formerly a vice president with Booz Allen Hamilton, he serves on the operations faculty at the Darden Graduate School.