Game theory: Difference between revisions
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Latest revision as of 09:03, 26 August 2019
Game theory is the systematic investigation of decision-making and interactions between people or other entities, modelling them by simplified games and rules.
It assumes that 'players' seek to maximise their perceived 'benefit' or 'rewards'.
However, benefits and rewards are a broader concept than money or other simple economic benefits.
They also include other positive forms of satisfaction such as a sense of justice, decency or self-esteem. Rewards may also include negative forms of satisfaction such as jealousy, and avoiding feeling insulted.
For example, most participants reject choices which are economically beneficial, but perceived to be insulting.
Game theory can enable a broader understanding than classical economic models based on incomplete assumptions about 'rational' profit-maximising behaviour.
