Applying Game Theory to the Incremental Funding Method in Software Projects

Game theory has been successfully used to ana- lyze situations in several areas, such as economics, politics, sociology and biology. The Incremental Funding Method (IFM) is a well known technique for optimizing the financial return of software projects under monopolistic conditions. This paper presents a new approach for the maximization of software projects' financial returns under duopolistic situations, based on the application of game theory concepts to the IFM. It provides decision makers with policies, which demonstrate how and when the product, divided into modules, should be developed and launched in order to maximize return on investment of a project.

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