Game Theory

The importance of strategic behavior in the human and social world is increasingly recognized in theory and practice. As a result, game theory has emerged as a fundamental instrument in pure and applied research. It has greatly enhanced our understanding in decision making. The discipline of game theory studies decision making in an interactive environment. It draws on mathematics, statistics, operations research, engineering, biology, economics, political science and other subjects. In canonical form, the game takes place when an individual pursues an objective in a situation in which other individuals concurrently pursue other (possibly conflicting, possibly overlapping) objectives and at the same time the objectives cannot be reached by individual actions of one decision maker
The formulation of optimal behaviors for individuals called players is a fundamental element in the theory of games. The player behaviors satisfying some special principles, called optimality principles, constitute a solution of the game. The problem then is to formulate these principles and, on this basis, define the behavior of each individual (player), investigate the existence of such behavior and, in the case that it exists create analytical or computational methods to find the optimal behavior. Game theory has greatly enhanced our understanding of decision making. As socioeconomics and political problems increase in complexity, further advances in the theory’s analytic content, methodology, techniques and applications, as well as case studies and empirical investigations, are urgently required. Theoretical results and applications in games are proceeding apace, in areas ranging from aircraft and missile control to inventory management, market development, natural recourse extraction, competition policy, negotiation techniques, macroeconomic and environmental planning, capital accumulation and investment. In the social sciences, economics and finance are the fields which most vividly display the characteristic of games. Not only would research be directed towards more realistic and relevant analysis of economic and social decision-making, but the game-theoretic approach is likely