The Game Theory

What is Game Theory

Game Theory is a study of strategies that could lead to multiple different outcomes depending on the decision made by the competing players. The focus of the game theory is the game itself, which serves as a model of a situation for the players who participated in the game.

The Model

A game model usually consists of the following components:

Players

They make choices based on information they hold about themselves, the other players and the structure of the game.

Strategy

The full set of choices a player makes in a game.

Payoffs

A payoff is the reward to each player, dependent on the outcome of the interaction. We decide payoffs by considering each player's preferences within the game.

Payoff Matrix

A table that lists all the available strategies and their respective payoffs.

By analysing the game model, a game theory could allow players to determine the most desirable strategy which results in the best outcome for every player involved.