Game theory, also known as game theory, is a new branch of modern mathematics and an important part of operational research. It is written in the game bible that game theory is that two people use each other's strategies to change their confrontation strategies in an equal game to achieve the meaning of winning. According to Professor robert aumann, who won the Nobel Prize in Economics in 2005 for his contribution to game theory, game theory is a theory to study interactive decision-making. The so-called interactive decision-making, that is, the decisions of all actors ([players]) are interactive, and everyone must consider other people's decisions in his own decision-making, of course, he also needs to consider other people's own considerations ... In such iterative consideration, he makes decisions and chooses the most favorable strategy for himself.

Game theory has a wide range of applications and has become an important research and analysis tool in the fields of economics, political science (domestic and international), military strategic issues, evolutionary biology and contemporary computer science. In addition, it also has important connections with accounting, statistics, mathematical foundation, social psychology, epistemology, ethics and other philosophical branches.

Game theory studies people's strategic interaction behavior. Game theory holds that: first, people are rational, that is, everyone will maximize their own interests under constraints; Second, there are conflicts between people in communication and cooperation, and their behaviors influence each other and information is asymmetric. Game theory studies human behavior, decision-making in direct interaction and balance of decision-making. In other words, game theory studies how to make people voluntarily make effective institutional arrangements for everyone to abide by and implement under the conditions of market economy, so as to improve the social welfare mechanism.

As a theory of analyzing competitive strategy with mathematical tools, game theory is more and more favored by enterprise strategic decision makers, helping them analyze the possible reactions of competitors to test whether their strategies are effective. Game theory can be traced back to the Art of War written by Sun Tzu, a military strategist in China, 2500 years ago. In the 1940s, mathematicians john von neumann and oskar morgenstern applied this method to economic theory. In 1970s, game theory gradually entered the mainstream of academic circles. At that time, famous economists thomas schelling and robert aumann used it to study adverse selection and information asymmetry (their research won the Nobel Prize in 2005).

Game theory is all-encompassing, but most companies choose a relatively simple model to help managers focus on competitive mentality. "Once complex reasoning is involved, game theory may become too professional and difficult to use," said Louis Thomas, a game theory professor at Wharton Business School. "The key is to get back to basics." For example, in the teaching of game theory, an example of "prisoner's dilemma" is usually cited to describe how a prisoner's rational choice determines the fate of two people (see chart: prisoner's dilemma).