Game Theory and Economic Behavior

Game theory is the study of how individuals or organizations make decisions when their choices affect each other. In economics, it helps explain how people compete, cooperate, or strategize to maximize their outcomes in situations like markets, negotiations, or auctions. Recognizing that others’ actions influence results, game theory analyzes the best moves considering opponents’ possible responses. It reveals patterns like competition, collaboration, and equilibrium, providing insight into economic behavior and strategic decision-making across various scenarios.