Game theory explains strategic decisionmaking from "summary" of The Economic Naturalist by Robert H. Frank
Game theory provides a powerful framework for understanding strategic decision-making. At its core, game theory is the study of how individuals or firms make decisions in situations where the outcome depends on the choices of others. By modeling strategic interactions as games, economists can analyze the potential outcomes and strategies of different players. One of the key insights of game theory is that the optimal strategy for a player depends not only on their own actions, but also on the actions of others. This interdependence of decision-making creates a complex web of interactions that can have far-reaching consequences. By considering the possible strategies and payoffs of all players involved, economists can predict how a game is likely to unfold. An important concept in game ...
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