Game Theory

the strategy that maximizes the player's well being, given the other player's choice

the best response for a player regardless of the option chosen by his or her opponent

the study of how individuals exhibit strategic behavior when decisions are interdependent

occurs when the outcomes of a decision depend not only on what the individual does, but on what others do as well

a game outcome in which no participant can gain by a change of strategy if the strategies of others remain unchanged

a market structure of imperfect competition in which a few large firms, each with a degree of market power, sell either standardized products or differentiated products

an outcome from playing a game

a table that can be used to describe the three components of a game: the players, the strategies, and the payoffs

a game that demonstrates why two rational players might not cooperate even if it appears to be in their best interest

in repeated games, a strategy in which players start out cooperating with opponents and then play the option the opponent played in the round before