Explain the game theory, Managerial Economics

Assignment Help:

Q. Explain the Game theory?

Game theory:  Game theory is a branch of applied mathematics which is used in the social sciences, most particularly in economics, as well as in biology (specifically evolutionary biology and ecology), political science, engineering, international relations, computer science and philosophy. Game theory tries at mathematically capturing behaviour in strategic situations or games in that an individual's success in making choices relies on the choices of others. Whereas initially developed to analyse competitions in that one individual does better at another's expense (zero sum games), it has been expanded to treat a wide class of interactions, that are classified according to numerous criteria.

Today, "game theory is a sort of umbrella or 'unified field' theory for rational side of Social science, where 'social' is interpreted broadly, to include human as well as non-Human players (computers, animals, plants)" (Aumann 1987).

Traditional applications of game theory aim at finding equilibrium in these games. In equilibrium, every player of the game has adopted a strategy which they are unlikely to change. Many equilibrium concepts have been developed (most famously Nash equilibrium) in an endeavour to capture this idea. These equilibrium concepts are differently motivated contingent on the field of application, though they frequently coincide oroverlap. This methodology isn't without criticism and debates continue over the appropriateness of particular equilibrium concepts, appropriateness of equilibrium altogether and usefulness of mathematical models more commonly.

Though some developments took place before it, the field of game theory came into being with Émile Borel's researches in his 1938 book Applications aux Jeux des Hazard and was followed by the 1944 book Theory of Games and Economic Behaviour by John von Neumann and Oskar Morgenstern. This theory was developed extensively in 1950s by many scholars. Game theory was afterwards explicitly applied to biology in the 1970s, though similar developments go back at least as far as the 1930s. Game theory has been widely recognised as a significant tool in many fields. Eight game theorists have won the Nobel Memorial Prize in Economic Sciences and John Maynard Smith was awarded the Crafoord Prize for his application of game theory to biology.

The games studied in game theory are well-defined mathematical objects. A game consists of a set of players, a set of moves (or strategies) available to those players and a specification of payoffs for each combination of strategies. Most cooperative games are presented in the characteristic function form, while the extensive and the normal forms are used to define non-cooperative games.


Related Discussions:- Explain the game theory

Income elasticity of demand, Income elasticity of demand The income el...

Income elasticity of demand The income elasticity of demand measures the degree of responsiveness of the quantity demanded of a product to changes in income.  Its co-efficient

Differentials and disequilibrium, DIFFERENTIALS AND DISEQUILIBRIUM In ...

DIFFERENTIALS AND DISEQUILIBRIUM In a free enterprise system, workers aim at maximizing their wages.  Hence, it would be expected that workers would move form low-paying indus

Explain the demand analysis - managerial economics, Demand analysis Dem...

Demand analysis Demand analysis is undertaken to forecast demand, which is a fundamental constituent in managerial decision-making. Demand forecasting is of important because a

What is an opportunity cost?, Opportunity cost is cost of a different that ...

Opportunity cost is cost of a different that must be forgone in order to pursue a definite action. Put another way, the advantages you could have received by taking an alternative

Define managerial economics according to mcnair and meriam, Define Manageri...

Define Managerial economics according to McNair and Meriam McNair and Meriam:  "Managerial economics comprises the use of economic modes of thought to analyse business situatio

What is consumer demand , Consumer Demand is how much of something that co...

Consumer Demand is how much of something that consumers are wanting. A company requires to know the consumer demand so they know how much of a product to build.

Direct taxes, DIRECT TAXES A direct tax is one where the impact and ...

DIRECT TAXES A direct tax is one where the impact and incidence of the Tax is on the same person e.g. Income Tax, death or estate duty, corporation taxes and capital gains

Demerits of direct taxes, Demerits of direct taxes a. Heavy direct tax...

Demerits of direct taxes a. Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to productivity by encouraging absenteeism

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd