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Game Theory (History (1950 (Nash invents concept of Nash equilibrium),…
Game Theory
History
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1994
Harsanyi, Nash, and Selten win Riksbank Prize (aka Nobel Prize) in economics for game theory work
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2007
Hurwicz, Maskin, and Myerson win Riksbank Prize (aka Nobel Prize) in economics for game theory work
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Introduction
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a tool for studying strategic behaviour, and the mutual recognition of interdependence
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Advantages
At least in two-person zero-sum games, game theory outlines a scientific quantitative technique that can be used by players to arrive at an optimal strategy
gives insight into several less-known aspects, which arise in situations of conflicting interests
develops a framework for analyzing decision making in such situations where interdependence of firms is considered
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Limitation
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assumption that players have the knowledge about their own pay-offs and pay-offs of others is not practical
echniques of solving games involving mixed strategies particularly in case of large pay-off matrix is very complicated
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