The Origins of Game Theory

The Origins of Game Theory ?

The initial foray into seeing such interaction as a game of strategy was taken up by John Van Neumann and Oskar Morgenstern in the late 1920s. In 1944, they published ' The Theory of Games and Economic Behaviour'. In their own words, they were attempting to look at the debate on exchange from a different perspective - that of a game of strategy. Following publication of this work, a number of academics, including mathematicians, took up the idea and as a result, game theory has become an accepted part of the theory of economics.

Its relevance to economics is extensive. It is relevant to the study of, amongst other things:

Market structures, specifically oligopolies
Market entry and exit strategies
Market equilibrium
Decisions on location (for example, decisions on outsourcing or locating in areas where there may be government assistance)
Auctions: for example, the government's decision to auction licences for third generation (3G) mobile phones
Public goods provision
Decision making at major national, European and international summits
Mergers and takeovers
Pricing strategies
Investment decisions

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