Overview
Game Theory is a vital tool for understanding strategic interactions in various fields, including economics, political science, and biology. It provides insights into how individuals and organizations make decisions when their outcomes depend on the actions of others. By analyzing different types of...
Key Terms
Example: In a pricing game, if both companies set their prices at a certain level, neither will benefit from changing their price alone.
Example: In poker, the amount won by one player is equal to the amount lost by others.
Example: In a game where two firms choose prices, a lower price may be a dominant strategy if it always leads to higher profits.
Example: In a joint venture, companies collaborate to maximize their profits.
Example: A payoff matrix can show the outcomes for two firms choosing different pricing strategies.
Example: In soccer, a player might randomly choose to shoot left or right to confuse the goalkeeper.