However, these imperfect solutions are preferable to unregulated tragedy of the commons. When searching for answers to the tragedy, it is important for decision-makers to take into account the actions of others. One way to understand the interdependency of all decision-makers is to apply game theory to the commons problem. Game theory is concerned with the way individuals make decisions when they know and take into account the fact that their actions affect each other. Many decisions that we make everyday can be thought of as games.
All market games have a list of players, their strategies, and their payoffs for each strategy.
Consider two children's clothing stores in a small city selling similar merchandise to similar clientele. This type of game is often shown in a payoff table similar to the one below. It is important to remember that the players act simultaneously and neither player has advance information on their opponent's move. Therefore, assuming both players will act in their own self-interest, they must form an assumption of a move by their opponent. However the safer strategy is to chose low, regardless of how the other player acts.