Risk Analysis III - Project Management A Managerial...

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Project Management A Managerial Approach Risk Analysis
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Game Theory
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Game theory Concerned with the study of decision  making in situations where 2 or more  rational opponents are involved under  conditions of competition and conflicting  interests.
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Game theory attempts to mathematically  capture behavior in  strategic situations , where  an individual's success in making choices  depends on the choices of others. While initially  developed to analyze competitions where one  individual does better at another's expense  ZERO SUM GAMES, it has been expanded to  treat a wide class of interactions, which are  classified according to several criteria 
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A game consists of a set of players, a set  of moves (or strategies) available to those  players, and a specification of payoffs for  each combination of strategies. 
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For e.g., candidates for election,advertising& marketing  campaigns by competing business firms,countries involved  in military battle etc.—all have conflicting interests. In a competitive situation the courses of  action(alternatives) for each competitor may be finite or  infinite. IT CAN BE A 2-PERSON GAME OR AN n- PERSON  GAME DEPENDING ON THE NO. OF PLAYERS.
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   In game theory   zero-sum  describes a situation in which  a participant's gain or loss is exactly balanced by the  losses or gains of the other participant(s). It is so named  because when the total gains of the participants are  added up, and the total losses are subtracted, they will  sum to zero. Zero-sum can be thought of more generally  as  constant sum  where the benefits and losses to all  players sum to the same value. Cutting a cake is zero-  or constant-sum because taking a larger piece reduces  the amount of cake available for others. In contrast,  non-zero-sum  describes a situation in which the  interacting parties' aggregate gains and losses is either  less than or more than zero. The sum of a negative and  a negative always equal a negative.
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