All of the following are characteristics of game theory except:

• A. Firms ignore the behavior of their competitors.
• B. Payoffs are determined by the combination of strategies chosen.
• C. Outcomes depend on the choices of all participants.
• D. Players make strategic decisions considering the actions of others.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of game theory. Game theory studies strategic interactions where the outcome for each participant depends on the actions of all involved players.
2. Step 2: Identify the key characteristics of game theory: (a) Players make strategic decisions considering the actions of others, (b) Payoffs depend on the combination of strategies chosen by all players, and (c) Outcomes depend on the choices of all participants.
3. Step 3: Analyze the given options and check which one contradicts the fundamental idea of game theory. Since game theory assumes players consider competitors' behavior, the statement 'Firms ignore the behavior of their competitors' does not fit.
4. Step 4: Conclude that the characteristic which is NOT part of game theory is the one stating that firms ignore competitors' behavior, because game theory explicitly involves anticipating and reacting to others' strategies.
5. Step 5: Summarize that all other options correctly describe game theory characteristics, reinforcing the importance of strategic interdependence among players.