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Engineering and Construction
Pages 5 (1255 words)
(Name) (Tutor’s Name) (Date) Game Theory Introduction Game theory can be simply referred to a tool for strategic decision making. In a narrow sense, game theory is a mathematical theory which is formed of games termed as zero-sum games. The paper ‘Theory of games and economic behavior (TGEB) published by Von Neumann is generally considered as the starting point of the game theory.
Game theory is mainly applied in areas such as psychology, logic, biology, economics, and political science. This is a report on game theory with particular focus given to its applications, benefits and limitations, and other aspects. Game Theory Game theory or alternatively interactive decision theory is based on the fundamental concept of zero-sum games, where gains of an individual are exactly to the net losses of other participants. The game theory can be applicable to a range of behavioral relations. According to the game theory, a game must specify four essential elements such as players of the game, information and actions (which are available for decision making), and payoffs for each outcome (Game Theory). The two main branches of game theory include cooperative and non-cooperative game theory. When the non-cooperative games are illustrated in the extensive and normal forms, characteristic function form is used to present most cooperative games. According to Fudenberg and Tirole, in the extensive form, games are played using trees (see figure 1) and each node (vertex) indicates a player’s point of choice. Each player is clearly specified with a number represented by the vertex (67). ...
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