Game theory
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Game theory is the study of cooperative and non-cooperative approaches to games and social situations where participants must choose between individual and collective benefits, with scenarios where decisions affect all participants. Most game theory models involve decision makers having two or more choices that result in a clear outcome of win or lose, with well-defined payoffs that participants receive depending on the outcome, and where decision makers know the rules and payoffs of others and will rationally choose the option with the greatest benefits.
Game theory
- 1. Game theory is the study of cooperative and non-cooperative approaches to games and social situations in which participants must choose between individual benefits and collective benefits. The games or hypothetical situations involve scenarios where participants must make decisions that affect not only the individual participants but also all the other participants as well. Most game theory models involve the following five conditions: 1. Each decision maker has two or more choices or sequences of choices ("plays"). 2. All possible combinations of decisions or plays result in a clear outcome: win or lose. 3. The scenarios have a well-defined outcome and decision makers receive a "payoff (the value of the outcome to the participants). That is, participants will gain or lose something depending on the outcome. 4. The decision makers know the rules of the game as well as the payoffs of the other decision makers. 5. The decision makers are rational: when faced with two alternatives, players will choose the option that provides the greatest benefits.