What is Game Theory?
Game theory is an essential aspect in economics, which involves the study of social situations and strategic decision making to secure the best outcomes. In political science and psychology, it is referred to as interactive decision theory. It is also used in parlor games like poker and bridge, which is done by making critical observations on how people interact. At present times, game theory has become an umbrella term in the study of a different social behaviors and logic. It also deals with the mathematical and logical determination of actions that need to be taken in order to win against competitors. In logic, game theory may be well elaborated through different formulas and equations.
Game theory has two branches namely cooperative and non-cooperative game theory. The former involves a coalition or competition between different groups of players. Here the players choose their actions jointly and decide in unison the actions to be taken. The latter is a game between individuals, wherein every player has his own definite move. Each player chooses his own strategy on how to achieve the goal for the whole team. Each theory varies in the level of detail involved in the game.
Game theory is founded by John Von Neumann in relation to zero-sum games. He describes the essence of the game theory to be related with how the player interpedently reacts to opponents, and promulgate a strategy to win the game. For example, in a democratic political economy, the voters and special interest groups are the players. The political candidate advocates to certain ideologies based on one-dimensional policy while voters criticize based on their own principles, which may be adverse to the politician. Exercising democratic relations, the voters communicate with fellow citizens to relay their message to the sovereign.