Dynamics of business games with management of fuzzy rules for decision making

Effective and efficient strategic decision making is the backbone for the success of a business organization. These decision making processes, used among its competitors in a particular industry, determine whether the business will continue to survive or not. In this research, fuzzy logic (FL) concept and game theory are being used to model strategic decision making processes by business organizations. Competition between business organizations is viewed as a game with each business organization as a player. A player formulates his own decisions by making his strategic moves based on uncertain information. This is the information he has about the opponents with respect to prevailing or anticipated market demand, cost of production, marketing, consolidation efforts and some other business variables. This uncertain information is being modelled using the concept of fuzzy logic. The game is played between a fuzzy agent and human agents in a resource allocation game between two players with uncertain information. Moreover, fuzzy rules are constructed that symbolize various rules and strategic variables that a firm takes into consideration before taking a decision. Our model also includes a learning procedure that enables the agent to optimize the fuzzy rules and his decision processes. Matlab software was used for the design and implementation of the fuzzy decision making system and this procedure and methodology can be easily implemented by business managers and can assist them in their strategic policy formulation. © 2010 Elsevier B.V.All rights reserved.