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game theroy
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Game Theory Game theory is defined as the analysis of multiple interacting rational agents. This definition is intentionally vague because game theory has been found to apply to an overwhelming amount of concepts. And before going into some of the more interesting examples and applications of game theory to economic sociology, it should be prudent to provide some explanation. A game is created when any two or more parties interact, and has four distinct parts. The players. The players are the interacting parties. One player can be one person, or a committee, a company, or an entire country. The rules. The rules of the game are the set feasible strategies that each player can choose, including when to choose them. A normal form game has players making their choices simultaneously, while a successive game has players responding to one another. The payoffs. The benefit or harm of each possible interaction must be defined (or predicted) in order to make an accurate decision. The payoff is most often given in terms of utility. Natural events. A natural event is anything that can plausibly happen outside of the control of the players and inside the realm of the game. Natural events are only important in successive games or in normal form games that are repeated over time. Having defined the component of a game and the purpose of the game, it should also be helpful to define and interpret the different types of equilibriums that may occur.
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