The Theory of Games and Economic Behavior

The Theory of Games and Economic Behavior, formulated by mathematician John von Neumann and economist Oskar Morgenstern, studies strategic interactions where the outcome for each participant depends on the decisions of all involved. It analyzes how individuals or groups make choices in competitive situations, considering potential actions and reactions of others. This theory applies to various fields, including economics, politics, and social sciences, helping to understand situations like market competition, negotiation, and voting, by predicting optimal strategies and behaviors based on the assumption that participants are rational and aim to maximize their outcomes.