Game theory is a branch of mathematics that deals with the strategies used in competitive situations. It's a fascinating field that has applications in various aspects of life, from economics to biology.
Key Concepts
Strategic Interaction: In game theory, players make decisions that affect the outcomes of the game, and these decisions are based on the strategies of other players.
Payoff Matrix: This is a table that shows the outcomes of the game for each combination of strategies chosen by the players.
Dominant Strategy: A strategy that is the best choice for a player regardless of what the other players choose.
Classic Games
Prisoner's Dilemma: This game demonstrates the conflict between individual interests and collective interests.
Nash Equilibrium: This is a situation in which no player can benefit by changing their strategy unilaterally.
Applications
Game theory is used in various fields, including:
Economics: To analyze markets and understand the behavior of firms and consumers.
Politics: To understand the decision-making process in international relations.
For more information about game theory, you can read our detailed guide on Game Theory Explained.