Game Theory and Business Decisions
The minimax theorem is a fundamental principle in game theory that states that in zero-sum games, the optimal strategy for one player minimizes the maximum possible loss, while simultaneously maximizing their minimum gain. This theorem establishes a critical relationship between players' strategies and their payoffs, highlighting how each player's choice impacts the other's outcome. It serves as a foundational concept for understanding optimal decision-making in competitive situations, leading to the identification of Nash equilibria in mixed strategies.
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