Based on true logic and analytical decision-making, the theories and steps of Game Theory are applied to various sources in real-life. Both mathematical and non-mathematical fields make use of Game theory to acquire relevant information and make the event a success. Sounds a bit vague but let’s take a deeper look at the concept of Game theory with suitable examples in the following sections.
Game theory - definition is quite straightforward in its meaning. It is a practical math concept on how a certain game is played using effective strategies. From every point of view, the player’s information such as timing, type of move, the direction of motion, the order of playing, etc. are some of the Game theory’s important determinants.
The Game theory is based purely on strategic playing. Balancing the diplomatic behaviour along with awareness about the rules of the event and each candidate participating is vital to winning the play.
The essence of a given game lies in its interdependence of the next move of each player.
The game theory falls under the Probability Distribution majors.
This interdependence is classified into 2 forms - Sequential and Simultaneous.
Being cautious about the other player, the person will move and arrange entities in a game within a specifically ordered fashion. This is called sequential game theory.
On the other hand, the simultaneous game theory involves playing all in 1 go, not accounting the moves or actions of the other player (s).
Game theory is referred to as the ‘science of strategies’.
The only best possible outcome is expressed only when the game theory is balanced between logic and mathematics.
This mathematical tactic deals with both conflict and cooperation among each player. Hence, rational decision-making can affect a player’s interest in their part.
Zero-sum game or the ‘constant-sum game’ deals with increasing or reducing the resources available during certain games. As the name says, the addition of every strategic combination will sum up to zero (0) only. Hence, the benefits gained by each player adds to zero. So, if 1 opponent wins, the other exact will lose the game.
Unlike the definition of game theory, here in a zero-sum game, there is an opposition between the interest of 2 players.
If a player wins the match but it is not probable to state if the other wins or not is termed to be the ‘non-zero-sum game’.
The idea of studying sociological, psychological, and political framework or something or someone, makes the application of game theory important in the field of social sciences like the population census, psychiatry, sociology, social work, etc.
From understanding the behaviour of firms and agencies to consumers and the market, this theory is preferred in the fields of economics and certain business sectors as well.
Even a few analysis-related subject-matters are discussed inside the fields of biology and zoology.
Game theory is useful in the learning of animal and human behaviour.
Not only is the application of game theory defined in the understanding of general behaviour in elements. Even developmental, normative, legal and ethical behaviours and motives are also assessed and judged with better precision using the game theory.
Let us finally close our learning with a simple example of game theory in the context of the most classic example of history deemed the ‘Prisoner’s Dilemma.’
The imaginary case of the Prisoner’s Dilemma involves 2 individuals stealing a vehicle and is held up. Upon further enquiry, it is also found that both the men were involved in a bank robbery issue as well. 2-years imprisonment is going to the judgement here.
Both the persons were put in different jails. Till now, both the men are suspected for the bank robbery case. Since the prisoners are jailed in 2 separate chambers, the line of communication between the 2 is already cut.
Now, with the investigation procedures forwarded, the following 2 response situations are about to be given for the 2 prisoners:
3-years of imprisonment, if both accused of bank robbery and vehicle theft.
1-year imprisonment for the one confessing the truth behind bank robbery. The other unanswered is given the order for 10-years imprisonment.
The table below includes the possible solutions/outcomes to be expected from both.
Both punished 3 years
Prisoner 1 punished 1 year
Prisoner 2 punished 10 years
Prisoner 1 punished 10 year
Prisoner 2 punished 1 year
Both punished 2 year
The table displayed above is drawn based on Game theory. And now, the likely choice is to not accept the theft. In that scenario, both the prisoners would serve 2-years imprisonment. However, it is nearly impossible to say whether the other person will confess or not. Hence, the chances are high for both the men to get confessed and serve the 3-years jail sentence.
Game theory is a practical concept and is regarded as the science of strategies. Game theory involves logic and mathematics. There are 2 forms of playing a game - sequential and simultaneous. Sequential gameplay takes account of the other player’s move and simultaneously is randomly ordered. Fields such as psychology, biology, statistics, social sciences and more use game theory. The ‘Prisoner’s Dilemma’ is the famous case of interpreting the outcomes using game theory.
1. List A Few Games Where Game Theory Can Be Applied.
Child-rearing to takeovers, chess, tennis, etc. are some of the games where the mathematical concept of game theory can be applied for winning the event with the best possible strategy.
2. What Are The Limitations Of Game Theory?
The major limitation of game theory is that besides logic plus math, a portion of it takes guesswork only. Also, a vast majority of the economical games found in real-life involve more than 4 players, the game theory is built and assumed only up to 4 players. Another criticism of game theory lies in its rationality.
3. How Important Is The Use Of Game Theory For Certain Practical Applications?
For certain practical applications, the significance of game theory is high, as this is more like a tool even when the conditions are not probable for one’s side. The game theory is quite helpful during times where formulating an alternative strategy is possible, in case of frequent and heavy fluctuations.
4. What Are The 3 Key Properties Of Game Theory?
Characteristic Analysis of Zero-sum, Two-player Games, and Non-zero-sum Games are the 3 key properties of game theory.
5. Explain The Importance Of Game Theory In The Domains Of Businesses And Startups.
In the domains of businesses and startups, game theory is vital to powerful and correct decision-making strategy. Also, this helps in deciding whether a new product or service has to be introduced or not in the market, considering the industry’s terms and situations. Even the transactions happening between an agent and his or her principal is determined to a great extent using the game theory in business.
6. Mention All The Different Types Of Game Theories Known To Date.
Cooperative and Non-Cooperative Games, Normal Form and Extensive Form Games, Simultaneous Move Games and Sequential Move Games, Constant Sum, Zero Sum, and Non-Zero Sum Games, and Symmetric and Asymmetric Games are the lists of all the present game theory types.