Samia
like is it to stay ahead of your opponent? can someone explain wat the whole theory is?...in simple terms???
Answer
Game theory is a branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in biology (particularly evolutionary biology and ecology), engineering, political science, international relations, computer science, and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, or games, in which an individual's success in making choices depends on the choices of others.
Example:
A classic example of the prisoner's dilemma (PD) is presented as follows:
Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?
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.
Game theory is a branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in biology (particularly evolutionary biology and ecology), engineering, political science, international relations, computer science, and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, or games, in which an individual's success in making choices depends on the choices of others.
Example:
A classic example of the prisoner's dilemma (PD) is presented as follows:
Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?
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.
What is Game Theory ?
neorock123
I have had a look around online, but I was wondering if anyone could give me a quick concise summary of what it regards. I am interested in how it relates to Economics especially, but any information is welcomed.
I also want to read up on Game Theory, so if anyone has a book that they could recommend that would be great. I am a complete newbie to Game Theory, so I won't understand any specialist terminology. Thanks.
Answer
Game theory is a mathematical application to a system of two or more participants. It is generally applied in economics where two or more companies are in the same industry and have effects on the others, usually called oligopolies. Think of Coke and Pepsi as players in a game where one wonders what Coke would do if Pepsi did something like raise or lower prices, launched an ad blitz, etc. Game theory tends to provide answers that both companies and outside investors would be interested in.
Wikipedia has a decent primer for game theory (http://en.wikipedia.org/wiki/Game_theory ), so I recommend starting there.
Game theory is a mathematical application to a system of two or more participants. It is generally applied in economics where two or more companies are in the same industry and have effects on the others, usually called oligopolies. Think of Coke and Pepsi as players in a game where one wonders what Coke would do if Pepsi did something like raise or lower prices, launched an ad blitz, etc. Game theory tends to provide answers that both companies and outside investors would be interested in.
Wikipedia has a decent primer for game theory (http://en.wikipedia.org/wiki/Game_theory ), so I recommend starting there.
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