Game theory is a branch of mathematics that deals with analyzing decision-making in competitive scenarios. A central concept in game theory is the notion of a “strategy.”

A strategy is a plan of action that a player takes in order to achieve their objectives. In some cases, a player may adopt what is known as a “trigger strategy.” In this article, we will explore what trigger strategies are and how they work.

What Is a Trigger Strategy?

A trigger strategy is a type of strategy that is designed to respond to the behavior of other players. Specifically, it involves taking an action in response to an opponent’s behavior that triggers a pre-planned sequence of actions. The goal of using a trigger strategy is often to deter or punish an opponent for engaging in undesirable behavior.

How Do Trigger Strategies Work?

Let’s consider an example to understand how trigger strategies work. Imagine two companies, A and B, are competing for market share in the same industry. Company A has already established itself as the market leader, but Company B wants to gain more market share.

Company B decides to adopt a trigger strategy: if Company A lowers its prices, Company B will respond by lowering its prices even further. The idea behind this strategy is that by responding aggressively to any price cuts made by Company A, Company B can prevent Company A from undercutting them and potentially driving them out of business.

This trigger strategy can be effective because it creates what is known as a “credible threat.” By publicly announcing their intention to respond aggressively to any price cuts made by Company A, Company B sends a signal that they are willing and able to engage in price wars. This makes it less likely that Company A will attempt to undercut them in the first place.

When Are Trigger Strategies Useful?

Trigger strategies are most useful when there are repeated interactions between players. In situations where players only interact once, there is little incentive to use a trigger strategy, as there is no opportunity for the other player to learn from their behavior.

However, in situations where players interact multiple times, trigger strategies can be very effective. This is because they allow players to build up a reputation for being willing to respond aggressively to undesirable behavior. Over time, this reputation can discourage other players from engaging in such behavior in the first place.

Conclusion

Trigger strategies are a powerful tool in game theory that can be used to influence the behavior of other players. By adopting a trigger strategy, a player can send a signal that they are willing and able to respond aggressively to undesirable behavior.

This can help deter opponents from engaging in such behavior and build up the player’s reputation over time. If you’re interested in game theory or strategic thinking, trigger strategies are definitely worth exploring further!