Game Theory homeworks are more complex other than any economics subject.
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Game Theory Game theory is a much new tool than most of the others tools which we have discussed and therefore becomes a large field of research for economists.
The Basics of Game Theory
Game theory is generally used for evaluating how individual agents relate or interact with each other. They may take into consideration that how other agents are choosing and then decide their own strategy depending on their structure. This directly reminds you of the situation taken in many parlor games. For example, how the players act in chess: They first decide on their particular moves, but they take this decision by taken into consideration that how opponent will respond. It is mostly a bad strategy to think that opponent will not discover your trap. A better strategy is to think as opponent understands everything that one knows oneself, and then make a base strategy on that.
To turn the above wordings into a theory, one needs to define the basic building blocks. Like in a game, we need players, outcomes, rules, and preferences over the outcomes. In most games of game theory, the terminologies used are:
1. Zero-sum and
2. Non-zero-sum Game
Zero-sum games are particular case of constant-sum games in which choices for the players can neither enhance nor reduce the available resources. In these types of games the total benefit to all players in the game for all combination of strategies always adds into zero.
Constant-sum games are used to check activities like theft hazard and gambling, but are not useful for the fundamental economic situation in which there are probable gains from trade.
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