What is Game Theory?
Game theory îs essentially theory of decision making, Economics îs about tension that exists between scarce resources & unlimited wants & needs, As result, we all have to make decisions, In making decision, there îs going to be some form of benefit & associated cost - opportunity cost,
Underpinning all of economics, therefore, îs process of exchange - two - more individuals - organisation/institutions etc, bargaining for exchange for some mutual benefit, However, în process of this exchange there are different levels of benefit & cost, The product of economic activity, of which exchange îs basis, has to be divided amongst various groups involved, It has been said that there are three fundamental questions relating to economic activity:
What îs to be produced?
How will ît be produced?
Who will get what îs produced?
We can look at economic activity în terms of cake - cake îs output of economy but who gets what proportion îs dependent on variety of different things, Game theorists have applied their minds to understanding how human interaction will affect how cake îs divided up,
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