Game Theory and the Dynamics of Entrepreneurial Decisions in Free Markets

This paper examines the role of game theory in entrepreneurial decision-making within dynamic markets. While classic models like the Nash Equilibrium explain strategic interactions, they often overlook market changes, innovation cycles, and adaptive entrepreneurship. The Austrian School's market process theory focuses on entrepreneurial discovery and continuous adaptation instead of rigid strategies. Case studies of Tesla and Uber compare game theory with Austrian economics. Simulation-based models, such as agent-based modelling (ABM) and evolutionary game theory (EGT), assess competitive adaptability and strategic decision-making under uncertainty. Findings suggest that static equilibrium models fail to capture strategic flexibility and industry transformation. Entrepreneurs succeed by iterating rather than following fixed plans. Simulation-based models better reflect competitive dynamics, showing that organizations embracing agile learning and adaptation maintain an advantage over those relying on traditional optimization. This paper highlights the need to integrate entrepreneurial theories with dynamic game-theoretic approaches. This paper further proposes a dynamic game-theoretic model that integrates entrepreneurial discovery, uncertainty, and adaptive market shaping