Overview
Game theory is a mathematical framework for analyzing strategic interactions among rational decision-makers. It provides insights into how individuals or groups can optimize their outcomes in competitive situations. By understanding concepts like Nash Equilibrium and zero-sum games, learners can app...
Key Terms
Example: In a pricing game, if both companies set the same price, neither can gain by changing it alone.
Example: In poker, the total amount won by one player is equal to the total amount lost by others.
Example: In a joint venture, companies collaborate to maximize profits.
Example: In a prisoner's dilemma, confessing is a dominant strategy for both players.
Example: A payoff matrix can show the outcomes of different pricing strategies between two firms.
Example: In rock-paper-scissors, a player may choose each option with equal probability.