198. An Introduction to Game Theory and its Applications

Game theory is formally defined as “the study of mathematical models of conflict and cooperation between intelligent rational decision-makers” (Myerson, 2001, p. 1). One alternative definition, proposed “as a more descriptive name for the discipline”, is “interactive decision theory” (Aumann, 2008, Abstract). In other words, it is the analysis (by means of mathematical reasoning) of a conflict of interest to find the optimal choices for reaching the desired outcome, under given conditions. Basically, it is the study of the ways to ‘win’ in a situation given certain circumstances.

Putting its limitations to one side, game theory has been profitably applied to many situations in the field of economics, biology, sociology, and political sciences, to predict important trends. This paper aims to offer a brief, clear overview of the main aspects of game theory and its wider applications.