Game theory is a branch of economics and applied mathematics that analyzes the behavior of rational decision-makers in situations where they have the opportunity to maximize their returns.
Glossary
- Prisoner's Dilemma: A scenario where two prisoners are arrested for a crime and both are offered immunity in return for a testimony against the other suspect. If one is convicted, he faces a harsh sentence. If both cooperate they will both be punished as liars and if neither cooperate both will receive light sentences. Neither prisoner is aware of the other's decision.
- Nash Equilibrium: Situation in which two competitors know the strategy of each other and realize they are best suited to leave their present strategy unchanged.
- Dominance: Occurs when a single strategy is better than any strategy the opponent chooses to use.
- Zero Sum Game: Game in which the allocation remains the same for every outcome, every player's gain will be offset by another's loss.
Notable Figures in Game Theory
- The New School: Prominent Figures in Game Theory
Which book gives a good introduction to game theory?(2 Answers)
A:
I like the book "The Art of Strategy" by Dixit and Nalebuff--it's a major revision of their classic book "Thinking Strategically." I also like "A Beautiful Math ...
References
Fast Facts
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Field formed after publication of Theory of Games and Economic Behavior in 1944
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Popularized in 2001 film, A Beautiful Mind
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Principles are applied in business, economics, biology, political science, sociology, and many other areas
