Game Theory
Definition
Game theory is an economic concept that analyzes strategic decision-making in situations where the outcome of one person's actions depends on the actions taken by others. It helps predict how individuals or firms will behave in competitive situations.
Related terms
Nash Equilibrium: A situation in game theory where each player has chosen their best strategy given what other players are doing, resulting in a stable outcome.
Prisoner's Dilemma: A classic example in game theory where two individuals face a choice between cooperating for mutual benefit or betraying each other for personal gain.
Dominant Strategy: In game theory, it refers to the best course of action for an individual regardless of what choices others make.
"Game Theory" appears in:
Subjects (2)
AP Psychology
Intro to Political Science
Study guides (2)
AP Microeconomics - 4.5 Oligopoly and Game Theory
AP Microeconomics - 6.5 Inequality
Additional resources (1)
AP Microeconomics - 2024 AP Microeconomics Exam Guide
Practice Questions (1)
What is game theory in the context of oligopoly?
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About Us
About Fiveable
Blog
Careers
Code of Conduct
Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.