Game Theory and Beyond


Game theory has evolved from a simple analysis of human behavior to an extremely sophisticated mathematical and logical tool. In fact, it has many applications beyond the realm of economics. It has become so entangled with microeconomic theory that the boundaries between the two disciplines are virtually nonexistent. Indeed, many game theory applications go beyond the traditional realm of economics and into the social and behavioral sciences. For instance, a soldier at the front may consider remaining in defense while he is at risk of being killed or wounded.

Game theory has broad applications beyond its core concepts. It can be applied to natural history and behavior. Microeconomists typically use small-world settings. Because of the importance of equilibria, game theory must account for attractiveness. In addition, uncertainty can be handled by taming the game and representing it as a pure risk. In the end, the study of human behavior may be useful in examining the development of language without the intervention of an external referee.

Games are activities performed by humans for their own amusement, and have rules or materials involved. Examples of these activities include chess, checkers, and checkers. They can be competitive or single-occasion activities, and can also involve gambling or manipulating the situation to their own advantage. However, the term “game” can also refer to the use of computers and other interactive media. With such an expansive definition, the term game can be used to describe a variety of different activities, including sports, business, and entertainment.

While this approach may seem complex, it is not hard to imagine how a game can be played in a simple manner. In its simplest form, it is essentially a set of interrelated nodes, each corresponding to a single outcome. The nodes in between are known as ‘action points’ and are conceived as a set of moves for each player. In an extensive-form game, the nodes are labeled with letters, while nodes outside the oval are labelled with numbers.

In fact, socialization is the primary method by which young people learn to play games. In addition to learning rules and equilibria, they also form networks with their peers. Therefore, the most sophisticated games are already in progress among socialized people. Then, novices must simply copy what they see and copy what others are doing. Lastly, institutions and cultural norms contain numerous reminders, such as homilies. For example, a religious community may include a homily or a simple rule of thumb.

While some theorists view game theory as an explanatory theory of human strategic reasoning, others take a normative view. They claim that humans behave rationally in nonparametric settings sometimes, so that it makes sense to incorporate the concept of rationality into game theory. However, this interpretation is unlikely to appeal to philosophers. Instead, it might be better to focus on the question of general rationality. If this is the case, game theory is an excellent tool for understanding human behavior.