Game theory is a branch of mathematics that deals with the study of decision making under conflict or competition scenarios. It has found immense applications in various fields, including economics, political science, psychology, and computer science. Game theory offers a framework to analyze the behavior of individuals or groups when interacting with each other.
There are several types of game theory that are commonly used to model different types of games. In this article, we will discuss some of the main types of game theory.
1. Cooperative Game Theory:
Cooperative game theory deals with situations where players can form coalitions and cooperate with each other to achieve a common goal.
In such games, players can negotiate and reach agreements on how to distribute the collective benefits among themselves. The characteristic feature of cooperative games is that the payoffs to players depend not only on their own actions but also on the actions taken by other players.
2. Non-Cooperative Game Theory:
Non-cooperative game theory deals with situations where players act independently and do not form coalitions or negotiate with each other.
Each player tries to maximize their own payoff without considering how it affects others’ outcomes. In non-cooperative games, each player’s payoff depends solely on their own actions.
3. Simultaneous Game Theory:
Simultaneous game theory deals with situations where all players make their decisions simultaneously without knowing what decisions others have made until they see the outcomes. Examples of simultaneous games include Prisoner’s Dilemma and Rock-Paper-Scissors.
4. Sequential Game Theory:
Sequential game theory deals with situations where players make their decisions in a sequence, taking into account the actions taken by previous players. This type of game is also known as extensive-form games and includes sub-game perfect Nash equilibrium as one of its solutions.
5. Zero-Sum Games:
Zero-sum games are those where the total payoff to all players remains constant, and any gain by one player is offset by an equal loss to another player.
In other words, the sum of payoffs to all players is zero. Examples of zero-sum games include chess and poker.
6. Non-Zero Sum Games:
Non-zero sum games are those where the total payoff to all players can vary, and there can be situations where all players can gain or lose together. Examples of non-zero sum games include market competition and international trade negotiations.
In conclusion, game theory offers a powerful tool for analyzing decision-making in various fields. The different types of game theory discussed here capture different aspects of strategic interaction among players and provide insights into how individuals or groups behave in competitive scenarios. By understanding these different types of game theories, we can develop better strategies for negotiation, conflict resolution, and decision-making.