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Game Theory

Game Theory
First published Sat Jan 25, 1997; substantive revision Wed May 5, 2010 Game theory is the study of the ways in which strategic interactions among economic agents produce outcomes with respect to the preferences (or utilities) of those agents, where the outcomes in question might have been intended by none of the agents. The meaning of this statement will not be clear to the non-expert until each of the italicized words and phrases has been explained and featured in some examples. Doing this will be the main business of this article. First, however, we provide some historical and philosophical context in order to motivate the reader for the technical work ahead. 1. The mathematical theory of games was invented by John von Neumann and Oskar Morgenstern (1944). Despite the fact that game theory has been rendered mathematically and logically systematic only since 1944, game-theoretic insights can be found among commentators going back to ancient times. 2. 2.1 Utility

http://plato.stanford.edu/entries/game-theory/

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