Bridging Information Gaps: Public Sector Intervention in Tourism Promotion during Crises – A Game Theory Approach

Abstract

Abstract The present study applies Game Theory to study public investment at tourist destinations to determine the ‘best action’ for tourist destinations in competitive scenarios. This study proves that the higher the probability that the public sector of the destination will invest in tourism promotion, the greater the expected financial benefits for the destination. Furthermore, the research results show that the higher the probability of tourists traveling to the destination, the greater the expected financial return for the Destination’s Public Sector (DPS) investing. Notably, the findings prove the positive impact of reducing information asymmetry between tourists and destinations. Results from applying Game Theory to the tourist industry show that spending on advertising may be motivated by more than just increasing visitor numbers. Finally, this article’s main contribution is offering a theoretical-mathematical framework applicable to any tourist destination.