The study of strategic interactions between rational decision-makers. Game theory analyzes situations where the outcome depends on the choices of multiple parties, each trying to optimize their own outcome.
Core Concepts
- Nash Equilibrium — state where no player benefits from changing strategy unilaterally
- Dominant Strategy — best strategy regardless of opponent’s choices
- Cooperative vs Non-Cooperative Games — with or without binding agreements
- Zero-Sum Games — one player’s gain is another’s loss
- Perfect Information — all players know all previous moves
- Asymmetric Information — players have different knowledge
Applications
- Economics and market competition
- Political strategy and voting
- Evolutionary biology and animal behavior
- Poker and competitive games
- Business negotiation and pricing
- Nuclear deterrence and arms races
Resources
- MIT OpenCourseWare: Game Theory — Comprehensive video course covering foundations, solution concepts, and applications