What is Game Theory?

In this post, I will be writing about game theory. Before anything, I would like to define game theory. For those who haven’t heard about game theory before, I would first like to set the record straight by saying that no, game theory doesn’t have anything to do with online games. Games, in the context of game theory, refer to actions taken by people preferring utility optimization to gain the best reward with certain strategies. Simply put, game theory is a process that uses strategies to gain what one wants.
One might wonder where the algorithm part comes in game theory, which is basically strategy making. Well.. In the “games” referred in game theory, mathematical formulas, certain algorithms, can be applied. Games are composed of participants, also known as the players, strategies (the actions players can take), and payoff (the reward). There are various forms of these games. Some of these forms include normal and extensive. And during the process of strategy making or using one’s strategy, one is able to apply certain algorithms to predict others’ actions or one’s own outcome.
It is interesting how mathematical algorithms are used to comprehend and analyze behaviors of other decision makers. In a way, it is using mathematics in a psychological sense, which are considered two very different areas.
In my next post, I will be writing about the history of game theory.

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