What Is Game Theory?
August 11, 2006Game theory is the mathematics of strategy. John Von Neumann, a Hungarian born mathematician, is considered the father of game theory. The sometimes poker player was inspired by the game to develop this branch of mathematics in the late 1920s.
Game theory studies decisions made in an environment where various participants interact. It takes into account the variety of choices that each person has at each point in the process and determines optimal behavior when weighed against the costs and the benefits of each action.
Unless a one-player game, a player's choices will be influenced by the actions and behaviors of other participants. The games studied by game theorists consist of a set of players, a set of moves, or strategies, and a specification of the payoffs (benefits) for each combination of strategies.
Games fall under different categories. Poker is a zero-sum game. This means that the total value of the game stays the same or goes down. Zero-sum games provide benefit to only some players and always at the expense of others.
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