Game Theory, or The Theory of Interdependent Decisions
The branch of pure mathematics now generally known as game theory was christened ‘the theory of games of strategy’ by its creators, the mathematician John von Neumann and the economist Oskar Morgenstern (von Neumann and Morgenstern, 1947). The longer name is enlightening since it brings out the important point that the games in question require the players to choose among strategies. But it would have been even more helpful if it had simply been called the theory of interdependent decisions. That expresses precisely what the theory is about: it embraces all interpersonal decision-making situations, the only essential requirements being that there should be two or more players and that the outcome must depend on the strategies chosen by each of them and on nothing else. If one of the players can determine the outcome by his own decision alone, then the game is a trivial one, of no theoretical interest. In mathematical terms, a ‘finite n-person game in normal form’ (the subject of the major part of the theory) is characterised simply’ by a function F that relates the combination of choices of strategiess1, s2,…, sn by each player to a set of values (x1, x2,…, xn) defining the outcome, or payoff, for each player.
KeywordsNormal Form Game Theory International Relation Mixed Strategy Pure Strategy
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