Introduction to Game Theory/Overview

Introduction to Game Theory

Introduction to Game Theory

Game theory, according to Wikipedia, is a branch of applied mathematics that uses models to study interactions with formalised incentive structures. These interactions are called "games". Game theory can be used to explain phenomena in the areas of economics, political theory, evolutionary science and military strategy, to name a few. There are several ingredients which are common to all games.

Players/Agents

The first thing we need are two or more players. These can also be called agents. These, like in a board game or sport, are the people, groups, animals etc. who actually interact. These players have preferences and goals. That is to say, like all normal people, these agents prefer some options over another. Peaches over apples, happiness over unhappiness - it doesn't really matter WHAT they prefer, but they must have preferences. These preferences are used to work out exactly what the outcomes of a game will be, because usually, players will choose options that increase the chances of getting their preferred outcomes.