This research paper explores the application of game theory to analyze the welfare and competitive dynamics of Hindu temples operating in an oligopolistic environment. The problem centres on how temples, positioned as players in an oligopoly, can strategically choose between modernization and maintaining traditional practices to optimize social welfare and resource allocation. The methodology involves developing a game-theoretical model, defining two temples (Temple A and Temple B) as players with two strategy options: modernization or traditionalism. A payoff matrix was constructed to quantify the outcomes of each strategy combination, and Nash equilibrium was identified to determine the optimal strategy. The results reveal that while modernization yields mutual payoffs of 5 for both temples, sticking to tradition provides a higher combined payoff of 12, presenting a classic prisoner’s dilemma. The findings suggest that while modernization offers benefits, cooperation and a focus on traditional practices can result in greater overall welfare for both temples. This study demonstrates the usefulness of game theory in understanding economic and strategic decisions within religious institutions and highlights the importance of cooperative strategies in maximizing social welfare.