You do this by trying to anticipate the reaction of your competitor to your next move and then factoring that reaction into your actual decision. It teaches people to think several moves ahead.
Computers make game theory a practical business tool.
Good decision makers always have been multidimensional in their thinking, but with computers it is easy to consider all kinds of permutations in the feedback loop. Executives like Trip Hawkins of 3DO are game theory experts, and three game theorists, John Nash, John Harsanyi and Reinhard Selten, won the Nobel Prize in economics in 1994. Billionaire Craig McCaw recently got exposure to game theory. Game theory took a big step toward wider acceptance last winter, when the arcane art was applied by the federal government as a way of maximizing its take from selling wireless communications rights. As recently as the early 1990s, the federal government gave away valuable rights for cellular licenses.