MENTAL MODEL · M13216

Game Theory

DecideHigh supportDecision Science

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Updated 2026-09-10

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INTRODUCTION

English translation pending.

CORE DEFINITION

Game theory studies how the choices of interacting economic agents produce outcomes relative to those agents' preferences, that is, their utilities, and those outcomes may be intended by no one. The entry explains the concepts of utility, game, and rationality with examples, and develops solution concepts such as Nash equilibrium and subgame perfection.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

- Formalize interaction: list the players, their available strategies, and their payoffs to make a vague interpersonal situation calculable. - Anticipate equilibrium: find the state no one wants to deviate from unilaterally, and foresee outcomes nobody intended. - Check robustness: examine multiple equilibria and test whether the prediction survives slight trembles in rationality.

anchor

Anchor fast decisions

Interaction is formalized as players, strategy sets, and payoff functions, and an equilibrium concept such as Nash equilibrium characterizes a state in which no one wishes to deviate unilaterally. Even with no designer, outcomes can be derived from individuals' best responses, which explains how results nobody wanted come about.

MINIMUM ACTION

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Practice this model in one real situation:

Define the players and the strategies available to each. 2. Assign utilities to the possible outcomes of the interaction. 3. Write the payoff matrix or the game tree. 4. Solve the game and identify all of its equilibria. 5. Check whether the equilibrium is plausible, handle multiple equilibria, and test robustness under relaxed rationality.

Check to track your progress (stored locally)

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Source support: Explicit

link
plato.stanford.eduhttps://plato.stanford.edu/entries/game-theory/ZH · Explicit
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