Game Theory and its origin:
Game theory is a mathematical approach by which two individuals make decisions about a situation which can have several outcomes, based on their interaction with each other. The objective of both players is to maximise their returns, thus cost and profit made out the situation can only be properly calculated based on the decisions made by the individuals. The description of the game is best understood by representation of the game, in which each player simultaneously chooses a strategy, and combination of strategies chosen by the players determine a payoff for each player which can be understood through a pay off diagram.
John von Neumann and Oskar Morgenstern introduced game theory in 1943 with "Theory of Games and Economic Behaviour." The major objective of Game Theory was to find mathematical answers to economic problems.
As per economic theory, producers often take supply and demand as the major ingredient to increase profit. But it ignores the strategies taken by other producers in order to improve their market share. Game Theory helps in anticipating the various strategies from different players and take into account all those strategic interactions.
Write a paper on Topic: To what extent does game theory helps the society to explain financial markets
Your paper must be targeted topic perfectly and it must include following table of indexes.
- 1.0 Game Theory and its origin: 3
- 1.1 Example on Game Theory: 3
- 1.2Terms associated with Game Theory 7
- 1.3 Application of Game Theory to analyze Financial markets 8
- Introduction 8
- 1.4 Application of Game Theory to Model Market Uncertainty 9
- 1.5 Approach of an investor from the standpoint of Game Theory and Probabilistic model 10
- 1.6 Application of various pricing model for analyzing asset prices from the perspective of Game Theory: 11
- 1.7 The application of Game Theory in order to prevent stock market manipulation 17
- 1.8 Exploiting Game Theory for Profit in the Stock Market 21
- 1.9 Major Disadvantages of Game Theory 25
- 2.0 Conclusion 26
- References 28
Your paper must be written in total 5000-5500 Words count and must be referenced properly.
Words Limit: 5400
References: Minimum 10