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MENTAL MODEL · M8111

Game Theory

Game Theory
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed two-person zero-sum games, in which a participant's gains or losses are exactly balanced by the losses and gains of the other participant. In the 1950s, it was extended to the study of non-zero-sum games, and the concept of the Nash equilibrium was introduced. Today, game theory provides a general mathematical framework for the analysis of strategic interactions.

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Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed two-person zero-sum games, in which a participant's gains or losses are exactly balanced by the losses and gains of the other participant. In the 1950s, it was extended to the study of non-zero-sum games, and the concept of the Nash equilibrium was introduced. Today, game theory provides a general mathematical framework for the analysis of strategic interactions.

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In an interdependent payoff structure, participants choose their optimal actions by predicting others' strategies; equilibria (such as Nash equilibrium) characterize stable outcomes, and mechanism design can guide desired results.

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