Game+Theory+Introduction

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Game theory (GT) is the study of strategic decision making. It is a powerful tool in understanding the relationships that are made and broken in the course of competition and cooperation.

More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers." An alternative term suggested "as a more descriptive name for the discipline is interactive decision theory. Game theory is mainly used in economics, political science, and psychology, as well as logic and biology. The first important text in game theory was Theory of Games and Economic Behaviour by the mathematicians John von Neumann and Oskar Morgenstern published in 1944.

As such Game Theory has been applied to numerous disciplines to identify options and as an aid to predict outcomes.

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GT is a technique used to analyse situations where for several players the outcome of an action by one of them depends not only on the particular action taken by that individual but also on the actions taken by the other (or others). So plans or strategies of the individuals concerned will be dependent on expectations about what the others are doing. Thus players are not making decisions in isolation, instead their decision making is interdependently related. In strategic games the actions of one individual or group impact on others and, crucially, the individuals involved are aware of this.

Source: [|http://lib.myilibrary.com.oxfordbrookes.idm.oclc.org/Open.aspx?id=106483]

GT is divided into two branches, called the non-cooperative and cooperative branches. The two branches of GT differ in how they formalise interdependence among the players. In the non-cooperative theory, a game is a detailed model of all the moves available to the players. By contrast, the cooperative theory abstracts away from this level of detail, and describes only the outcomes that result when the players come together in different combinations. Though standard, the terms noncooperative and cooperative game theory are perhaps unfortunate. They might suggest that there is no place for cooperation in the former and no place for conflict, competition etc. in the latter. In fact, neither is the case. One part of the non-cooperative theory (the theory of repeated games) studies the possibility of cooperation in ongoing relationships. And the cooperative theory embodies not just cooperation among players, but also competition in a particularly strong, unfettered form. The non-cooperative theory might be better termed procedural game theory, the cooperative theory combinatorial game theory.

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