Game Theory entails the mathematical modelling of decision making situations in which several participants interact with each other and impact on each other with their respective decision choices. Various fields of study, such as Mathematics, Economics, Computer Science and many more, converge in this area of research.
In Game Theory, we assume that individual actors – who are often referred to as players – autonomously make their decisions in a rational and intelligent manner. These decisions are mutually influential. Examples of where such “games” find application are: the placement of advertisements on a website, auctions, market investments, or even the daily choice of whether to take the car or the bus – and which route to take – to get from home to the workplace.
These are examples for problems that occur in Strategic Game Theory. The goal is to analyze the strategies of different players and their interdependencies. On the other hand, Cooperative Game Theory entails concepts being developed and analyzed that will ensure that jointly incurred costs are distributed amongst the players in a fair and stable manner. Game-theoretic methods and concepts enjoy a broad application, for example in the planning of transportation infrastructure, in the analysis of retail markets or other areas of Management Science.