Game Th Eory, Bargaining Th Eory, and Strategic Reasoning

Abstract

Strategic reasoning must take place, explicitly or implicitly, within some framework, whether this be a formal one or otherwise. It is often assumed that game theory is the only formal frame work for strategic analysis. In this paper, however, strategic reasoning is distinguished from its particular bases. It is suggested that formal bases other than the game theoretic one are possible. A number of weaknesses and inadequacies of game theory, both as a direct and as an indirect basis for strategic reasoning, are pointed out. (With a game theoretic model of bargaining proces ses which in turn serves as a framework for strategic reasoning, game theory forms an indirect basis.) An alternative approach is suggested, involving the idea of a closed loop system; and it is argued that this may serve as a more fruitful basis for strategic reasoning.