Is game theory a hard class?
Great introduction to game theory, especially for those with some mathematical background. Good examples of using models presented in the course to analyze real-world situations. This course is pretty challenging and involves some complicated math, but it is really helpful!
Another problem is that game theory is mentally taxing. In many games, including some that initially seem pretty simple, finding the Nash equilibria can be very difficult, at least for ordinary mortals.
Game theory is the branch of mathematics which focuses on the analysis of such games. Game theory can be divided into two main subdisciplines: classical game theory and combinatorial game theory. Classical game theory studies games in which players move, bet, or strategize simultaneously.
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Game theory is used extensively in various forms of collective bargaining and negotiation. For instance, during a strike or lockout, unions and management negotiate to raise wages. It is possible to maximize the welfare of both workers and control by using game theory to arrive at the optimal solution.
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Game theory, with its highly questionable assumptions on 'rationality', equilibrium solutions, information, and knowledge, simply makes it useless as an instrument for explaining real-world phenomena. Applications of game theory have on the whole resulted in massive predictive failures.
Like most theories, the biggest drawback of the game theory is that it depends on assumptions. The approach uses assumptions, like people behave rationally in self-interest, and more. In many scenarios, these assumptions may not hold.
Economists often use game theory to understand oligopoly firm behavior. It helps to predict likely outcomes when firms engage in certain behaviors, such as price-fixing and collusion.
This may sound very complicated and beyond any reasonable analysis. But game theory helps you to analyse and understand these situations. It can even predict the outcome of some of these situations by identifying actions you should always take or actions you should never take.
Is game theory a zero sum game?
Zero-sum games are found in game theory, but are less common than non-zero sum games. Poker and gambling are popular examples of zero-sum games since the sum of the amounts won by some players equals the combined losses of the others.
Game theory is the study of mathematical models of strategic interactions among rational agents. It has applications in all fields of social science, as well as in logic, systems science and computer science.
Game theory is concerned with predicting the outcome of games of strategy, in which the "players" (two or more businesses competing in a market) have incomplete information about the other's intentions.
Game theory is the study of the ways in which interacting choices of economic agents produce outcomes with respect to the preferences (or utilities) of those agents, where the outcomes in question might have been intended by none of the agents.
Game Theory can be used for pricing strategies
In oligopoly firms may be deciding whether to cut prices, increase prices or keep them static. If firms cut price, you would gain an increase in market share. Other firms don't want to allow this. Therefore, they cut prices as well.
While used in a number of disciplines, game theory is most notably used as a tool within the study of economics. The economic application of game theory can be a valuable tool to aid in the fundamental analysis of industries, sectors, and any strategic interaction between two or more firms.
