Russel Crow. You like him? Well who doesn’t? Still, this is not about him, but about a man he played on the screen, a 50’s mathematician John Nash who Russel portrayed in “A beautiful mind”. John Nash came up with Game Theory, a system now being applied to practically anything you can think of that requires any kind of interaction between individuals. You don’t need to be daylight deprived, crisps dust covered, gamer locked up in a basement somewhere for16 hours straight to be subject to (or interested in) the premises of game theory. Games are everywhere. Every time people interact and the payoff depends on the actions and decision of others – you’re in a game. Stakes are much higher than your childhood hide and go seek, jenga or pickup sticks but it’s still a game. Brilliant men and women through history have created a wider frame to put all of existence in and find universally applicable explanations. Game theory applies to real games just as well as economy, politics, biology, military, social sciences, psychology…
It is split in two to accommodate for different situations so one deals with cooperative and the other with non-cooperative scenarios aka competition, meaning that the game will have winners and losers Games on the competitive end have a point which is ideal called the Nash Equilibrium where a player made a choice which will leave them better off no matter what other players choose to do. The object of the game is actually that you choose the best choice for you as your aim is winning. Cooperative game is when multiple people work together with the same goal and hinges on contributions to and benefits from the group called the coalition. While competitive games have the mentioned Nash equilibrium, cooperative games have the Shapely value where costs and gains are divided among the players according to what they contribute to the group and there are a few rules.
First rule is marginal value of each player, that is what is gained or lost by adding or removing them from the game. Second – if two bring ad contribute the same things to the coalition they should be rewarded equally. Third – there is zero value in dummy players aka if you contribute no value you should receive no benefit. This particular one gets a bit adapted in real life because the complex nature of living may leave some “players” of the social unable to contribute to “the game” at certain times due to injury, illness, old age, personal issues…Forth rule says that in games with multiple parts cots and benefits should be spread out through those parts. You may contribute to the game more at one period and less in some other periods and the benefits and compensations should reflect that. There should be regular reviews as it is not fair to use the same solutions every time and adjustments need to be made regularly.
These are the basic ins and outs of what a game theory is but there is so much more. The core of it is that it can help us be smart in competitive situations and fair in cooperative ones and that basically all of human experience falls into game theory, in one form or another.