## game theory

From The New Palgrave Dictionary of Economics, Second Edition, 2008

Edited by
Steven
N.
Durlauf
and
Lawrence
E.
Blume

Alternate versions available:
1987 Edition

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### Abstract

Game theory concerns the behaviour of decision makers whose decisions affect each other. Its analysis is from a rational rather than a psychological or sociological viewpoint. It is indeed a sort of umbrella theory for the rational side of social science, where ‘social’ is interpreted broadly, to include human as well as non-human players (computers, animals, plants). Its methodologies apply in principle to all interactive situations, especially in economics, political science, evolutionary biology, and computer science. There are also important connections with accounting, statistics, the foundations of mathematics, social psychology, law, business, and branches of philosophy such as epistemology and ethics.

### Keywords

asymmetric information; Aumann, R. J.; Axelrod, R.; axiomatics; bargaining; bounded rationality; Brouwer's fixed-point theorem; coalitional games; coalitions; common knowledge assumption; competitive equilibrium; consistency; continuous games; cooperative game theory; cooperative games; cores; correlated equilibria; cost allocation; differential games; distributed computing; duality theorems; dynamic games; ethics; evolutionary economics; expected utility theory; extensive form games; fixed threats; folk theorem; game theory; games of incomplete information; general equilibrium; Gillies, D.; Harsanyi, J.; impossibility theorem; imputations; individual rationality; Kakutani's fixed point theorem; kernel; Kuhn, H.; Lemke–Howson algorithm; linear inequalities; linear programming; Luce, R.; market games; mathematical economics; mathematical programming; Milnor, J.; minimax theorem; mixed strategy game; monopoly; monopsony; Morgenstern, O.; Nash equilibrium; Nash program; Nash, J.; net worth; non-cooperative games; nucleolus; oligopoly; perfect information; prisoner's dilemma; probability distributions; Raiffa, H.; Ramsey, F.; randomization; refinements of Nash equilibrium; repeated games; Savage, L.; Selten, R.; shadow pricing; Shapley value; Shapley, L.; Shubik, M.; small worlds; Maynard Smith, J.; solution concepts; stable set theory; statistical decision theory; stochastic games; strategic equilibrium; strategic games; strictly competitive games; strictly determined games; subgame perfection; subgames; superadditivity; testing; tit for tat; transferable utility; Tucker, A.; uncertainty; utility functions; value equivalence principle; von Neumann, J.; voting games; weighted voting game; Zermelo's theorem; zero-sum games

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### How to cite this article

Aumann, R.J. "game theory." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 15 September 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_G000007> doi:10.1057/9780230226203.0615