# Game Theory Flashcards, test questions and answers

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## What is Game Theory?

Game Theory is a branch of mathematics that studies decision making in strategic situations. It is the study of how rational decision makers interact with each other and how their decisions affect the outcomes of their interactions. Game Theory was first developed by John von Neumann and Oskar Morgenstern in 1944. Since then, it has become an important tool for economists, political scientists, mathematicians, and others in analyzing various competitive scenarios such as those found in business, politics, international relations, and even biology.Game Theory examines the choices that people make when faced with conflicting interests or limited resources. By understanding the motivations behind these choices, game theorists can predict what strategies people may take when faced with similar scenarios. This knowledge can be used to devise strategies which could lead to beneficial outcomes for all parties involved in a given situation. For example, if two firms are competing against each other for market share they may use game theory to determine how best to compete without driving up costs or engaging in destructive competition that could hurt both parties’ bottom lines. In addition to helping individuals and organizations make better decisions based on strategic analysis, game theory is also used to explain why certain behaviors occur within groups or societies at large. Game theory can help us understand why some people are more successful than others at negotiating deals or why certain social norms persist even when we’d expect them to change over time due adaptation pressures from various external forces. Game Theory is an ever-evolving field of study that continues to shed light on many aspects of human behavior and interaction throughout society today as well as into the future.