Game theory

Game theory is the study of how and why people make decisions.^[1][2][3] (Specifically, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers".)^[4] It helps people understand parts of science and politics. An alternative term suggested "as a more descriptive name for the discipline" is interactive decision theory.^[5]

In the Cold War period, the strategic decisions of the United States and the Soviet Union were sometimes viewed as an exercise in game theory.^[6] In that case the "players" being studied were the United States and the Soviet Union.^[7][8]

Game theory is not just about games, but how and why businesses make decisions, and just about any decision based on valuing likely outcomes.^[9] In game theory, all of these situations are "games" since the people involved make choices based on how they value the possible outcomes of the choices. This is true even of cases where the decisions of a single person only affect that one person.

Game theory is found in the financial choices people make, and is found in the study of economics.^[10]

1. ↑ Skyrms, Brian 1996. Evolution of the social contract. Cambridge University Press. ISBN 978-0-521-55583-8
2. ↑ Rapoport A. & Chammah A.M. 1965. Prisoner's dilemma: a study in conflict and cooperation. Ann Arbor: University of Michigan Press.
3. ↑ Bicchieri, C. (2006), The Grammar of Society: the Nature and Dynamics of Social Norms, Cambridge University Press, ISBN 0521573726
4. ↑ Bicchieri, Cristina (1989), "Self-Refuting Theories of Strategic Interaction: A Paradox of Common Knowledge", Erkenntnis, 30 (1–2): 69–85, doi:10.1007/BF00184816, S2CID 120848181
5. ↑ Bicchieri, Cristina (1993), Rationality and Coordination, Cambridge University Press, ISBN 0-521-57444-7
6. ↑ Skyrms, Brian 1990. The dynamics of rational deliberation. Harvard University Press. ISBN 978-0674218857
7. ↑ Bicchieri, Cristina; Jeffrey, Richard; Skyrms, Brian, eds. (1999), "Knowledge, belief, and counterfactual reasoning in games", The logic of strategy, New York: Oxford University Press, ISBN 0195117158
8. ↑ For a more detailed discussion of the use of game theory in ethics, see the Stanford Encyclopedia of Philosophy's entry game theory and ethics.
9. ↑ Rapoport A. 1960. Fights. games and debates. Ann Arbor: University of Michigan Press. ISBN 0-472-08741-X
10. ↑ McNulty, Daniel. "The basics of game theory". Investopedia. Retrieved 2015-02-28.