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Fundamentals of game theory (the art and science of rational decision-making)
Game theory is a mathematical analysis method to study human decision-making behavior, and discusses the influence and results of individual or group decision-making behavior on each other under limited resources and information. Game theory is widely used, including economics, politics, psychology and other fields. In modern society, we play all kinds of games every day, so it is very important to understand the basis of game theory.

Operation steps of game theory

The analysis process of game theory can be divided into the following steps:

1. Determine the participants and strategies of the game.

Before game theory analysis, it is necessary to make clear the participants in the game and the strategies of each participant. Participants can be individuals, groups, companies, etc. And strategy is the action taken by the game participants.

2. Establish Game model

Game model is the basis of game theory analysis, which includes game rules, player strategies and game results. The establishment of Game model needs to consider the information and interests of the participants, as well as the background and purpose of the game.

3. Determine the solution of the game

The solution of the game refers to the result that participants can achieve when adopting the optimal strategy in the game model. The solution of the game can be calculated by mathematical methods, such as Nash equilibrium, maximum loss minimization and so on.

4. Analyze the results of the competition

The outcome of the game depends on the strategy of the participants and the solution of the game. Analyzing the game results can help participants understand the interests and risks of themselves and other participants, so as to make more informed decisions.

Application of game theory

Game theory is widely used. Here are some examples:

1

Auction is a kind of game behavior, and buyers and sellers adopt different strategies in the auction to strive for the greatest benefit. The outcome of the auction depends on the strategies and auction rules of the buyers and sellers.

investment

Investment is a game behavior, and investors need to consider the changes in the market and the behavior of other investors in order to make the best investment decision. The result of investment depends on investors' strategies and market changes.

3. Game theory

Game theory is a branch of game theory, which studies the characteristics of game model and the nature of reconciliation. The application of game theory includes social science, computer science and many other fields.