A Study On Game Theory - 3022 Words

In economics, there are many subfields of study and one that has the most difficulty and importance is the study of game theory. From the beginning of economics, mathematical concepts and analyzing people’s behavior have been tools to determine the choices people will make in a buyer and seller market. The most influential person in game theory is without a doubt John Nash. John Nash came up with the Nash equilibrium, which is used in everyday Intro to Game Theory courses across the United States. However, Nash’s idea for non-cooperative games came about in the mid-20th century, so before then there were many other game theorist who provided their outlook on how to solve complex games. Furthermore, there are many economist that are†¦show more content†¦Hence, Nash’s creation of non-cooperative game theory should be looked upon as game theory’s most brilliant idea ever thought of in economics. On the contrary, the father of economics, Adam Smith, introduction to economic theory by using â€Å"linear algebra on prices and quantities in a vector space of commodity and allocations†, which made him very popular during his time (Myerson). Also, Adam Smith influenced other economist to apply mathematics to their own theories. The Nash equilibrium can be a useful tool to conduct an analysis on incentives in social institutions and also how simplistic the Nash equilibrium can be, and it is obvious to say how astonishing that this concept was not thought of before John Nash. Moreover, the first application of Nash equilibrium in a mathematical model comes from Augustin Cournot. In 1838, Cournot published a book on economics that produced the theory of oligopolistic firms that includes monopolists and perfect competitors. On a side note, Cournot is known for being the founder of oligopoly theory, â€Å"but to give him credit for non-cooperative games would be to confuse its methodology with its general formulation† (Mo rrison). He came up with the oligopoly equilibrium by conducting an analysis on firms operating in aShow MoreRelatedGame Theory Is The Study Of Decision Making Under Competition1289 Words   |  6 PagesGame Theory is the study of decision making under competition. More specially, Game Theory is the study of optimal decision making under competition when one individual s decisions affect the outcome of a situation for all other individuals involved. 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