For example, when an investor contemplates buying security, they consider its potential future value, which is uncertain and fluctuates due to market forces. You can use game theory to help you predict what other people may do in situations where the outcomes are unclear.
Related: What Is a Market Segment? Definition, Benefits, and Steps How does game theory work? You can use game theory to analyze interactions, specifically to predict what course of action the participants in an exchange may take when they believe their competitors are acting strategically. Using that information, it then predicts how others might react to those choices. Game theory tries to anticipate why people choose particular actions. Instead, it's a way of looking at what alternatives might be available to you and what outcomes are likely to arise from each.
Game theory is not used to beat an opponent or even determine the best choice for a decision-maker in any one scenario. The term game in game theory draws its meaning from competitive games, where two players try to outplay each other through strategies and expert guesswork. Game theory is a mathematical framework used to analyze the consequences of certain decision-making scenarios. View more jobs on Indeed View more What is game theory?
