Browsing: Game Theory

Surprisingly often, human behavior can be explained by game theory. Game theory is a branch within mathematics, economics, and political science that examines strategic interactions between individuals or groups. Game theory analyzes decision-making in situations where the outcome depends not only on the choices of a single actor but also on the choices of other actors. Game theory is used to understand how people and organizations choose to act in different situations when they have conflicting interests and limited resources.

It is a tool for studying strategic behavior, that is, situations where each actor must consider the possible decisions and strategies of other actors.

In game theory, these situations are often modeled as games, where 'players' can be individuals, companies, nations, or any other decision-making entities. Each game is defined by its rules, which describe what the players can do, and the payoffs or outcomes that result from different actions.

Examples of well-known games in game theory include the 'prisoner's dilemma,' where two players must decide whether to cooperate or betray each other, and 'hawk-dove,' which models competition for resources. Game theory provides a framework for understanding and sometimes predicting actors' behaviors in these complex situations.