Why is game theory a game-changer for procurement strategy

In this blog, taken from Beroe’s An Introduction to Real Autonomous Negotiation, we examine how a field once reserved for economists and academics is today being used to reshape commercial negotiations. Game theory can give procurement professionals a powerful framework to anticipate supplier behaviors, remove bias from decision-making, and even restructure the rules of engagement at the point of negotiation, helping teams achieve better outcomes and generate value. Rather than relying on instinct or spreadsheets, game theory can enable procurement to negotiate smarter, not harder, driving greater savings, efficiencies, and most importantly value across the supply chain.

How can organizations employ game theory in procurement? 

In procurement, negotiation is more than a transactional function, it’s a strategic lever. Game theory can equip buyers with a structured approach to negotiation, one that anticipates supplier behaviors, enhances leverage and drives better commercial results. But what is it that makes game theory so well suited to procurement?  

At its essence, procurement is a high stakes ‘game’ of strategic interplay. Multiple suppliers, competing priorities, asymmetric information, and conflicting incentives define the negotiation landscape. Traditional methods ranging from gut instinct to static e-auctions rarely account for this complexity. Game theory can bring scientific rigor to negotiation by modeling interactions as dynamic games and prescribing optimal strategies based on predicted behaviors. But its real power lies in more than prediction; it enables procurement teams to change the rules of the game itself to ensure the buyer gets the best achievable outcome, structuring negotiations in ways that systematically drive better outcomes and unlock the full savings potential available.   

“Game theory doesn’t replace the art of negotiation – it enhances it”  

Game theory goes beyond price, because it’s not about haggling harder but negotiating smarter to drive value, utilizing well-designed processes to get better outcomes across the supply chain. It’s a science that can help procurement teams predict and understand all possible negotiation outcomes, letting them shape the rules of a negotiation to get the outcome that is best for them.   

Properly applied, Game Theory can help:  

1. Generate significant savings  
2. Predict supplier behavior  
3. Structure smarter negotiations  
4. Optimize supply chain outcomes beyond price  

Game theory works – but until now, it’s been locked inside expensive consulting firms which have had the budget for proprietary systems or expert teams to apply game theory to deals. That means most deals today – trillions of dollars' worth – are still negotiated with Excel spreadsheets or using gut feel. What if instead, game theory could be built into your sourcing processes, allowing you to run smarter negotiations without creating extra workload?  

Why game theory?  

• It models negotiation as a strategic interaction, not just a transaction  
• It reshapes the negotiation dynamic, enabling procurement teams to set terms and steer outcomes strategically, not just reactively   
• It removes bias and inconsistency from human-led negotiations  

 Game theory can deliver better outcomes:  

• More consistent savings  
• Faster negotiation cycles  
• Less supplier friction 

 To learn more, download our complete guide, An Introduction to Real Autonomous Negotiation here.