A game-theory approach to manage decision errors

Abstract

With the fast development of modern computer and networks, information communication between firms and users becomes more complex. Recently, a game-theory approach has been widely used to investigate this issue. However, for firms and users, inaccuracies (defined as decision errors) persist in the gap between strategic decisions and actual actions. This paper, based on game theory, analyses the effects of decision errors on optimal equilibrium strategy of the firm and the user. Precisely speaking, we analysed how the firm and the user adjust their strategy accordingly to compensate for the mistakes caused by decision errors. Besides, we demonstrated that decision errors are not necessarily bad for the firm, and put forward the optimal methods of managing decision errors.

Keywords

• Intrusion detection system (IDS)
• Game-theory
• Decision Errors