Uses of Game Theory
The idea behind game theory is that you can use mathematics to formulate a strategy and defeat your opponent in games such as chess, or go. But, did you know that game theory can be used in more than just games? This page will tell how game theory is applied in different sciences and real life situations.
Political Science
The application of game theory to political science is focused in the areas of fair division, political economy, public choice, positive political theory, and social choice theory. Politicians and researchers use these areas extensively to predict the outcomes of elections and public opinions.Politics is what game theory calls a zero sum game. In other words one player’s gain is exactly equal to the other player’s loss.
Example: say a senator from the Midwest wants a bill passed to ensure that the federal government will provide agricultural aid if a drought or tornado hits and crops are destroyed. The bill passes and calls for 8 billion dollars, but because of deficit spending the government has to appropriate funding from an existing fund, so they take it from the military’s budget. This would mean less money for recruitment, training, equipment, and payrolls. This would cause the military to downsize to make up for the loss.
Economics and Business
Economists have used game theory to analyze a wide array of economic activities, such as auctions, bargaining, duopolies, fair division, oligopolies, social network formation, and voting systems. This research focuses on sets of strategies known as equilibria in games.
Equilibria or solution concept is a process in which one can predict what the outcome may be. (strategies that will or might be adopted by players.)
The most famous equilibria is known as the Nash equilibrium. A set of strategies is considered a Nash equilibrium, if each represents a best response to the other strategies. If all the players are playing a Nash equilibrium set then there is no need to deviate, since the strategy they have is the best they can do given what others are doing
Computer Science and Logic
Game theory plays an important role in logic and in computer science.
Several logical theories have a basis in game theory. Also, computer scientists have used games to model interactive computations.
