The intention of game theory is to produce optimal decision-making of independent and competing actors in a strategic setting.

Any time we have a situation with two or more players that involve known payouts or quantifiable consequences, we can use game theory to help determine the most likely outcomes.

History

John von Neumann and economist Oskar Morgenstern in the 1940s.

Mathematician John Nash

Concepts

The Nash Equilibrium

Game Types

zero-sum/non-zero-sum

zero-sum: classic “games” where there is only one winner and one loser. Adding the win and the loss sums to zero.

cooperative/non-cooperative

simultaneous/sequential

Games

Prisoner’s Dilemma

Dictator Game

Volunteer’s Dilemma

The Centipede Game

Strategies

Maximax

Maximin

Dominant

Pure

Mixed

resources

LLM Prompt

“I want to learn about Game Theory to apply it to my business for business strategy. Can you create a text-based mind map that explains this topic in a visually structured way? The mind map should break down the key concepts, their interrelations, and practical applications in a format that’s easy to understand and visually engaging. This will help me grasp the topic more effectively by appealing to my preference for visual learning and enabling me to implement these insights in my business context.”