Game theory is a widely used concept in various fields like economics, political science, psychology, and many others. It is a mathematical framework that helps in understanding strategic decision-making between two or more rational individuals.
But do you know who introduced the concept of game theory? Let’s find out.
John von Neumann
John von Neumann is credited with introducing the concept of game theory in 1928. He was a Hungarian-American mathematician who made significant contributions to various fields like quantum mechanics, computer science, and economics.
Early Life and Education
Von Neumann was born on December 28, 1903, in Budapest, Hungary. He showed exceptional talent in mathematics from an early age and was fluent in several languages. He completed his doctoral studies at the age of 22 from the University of Budapest.
Contributions to Game Theory
In 1928, von Neumann published a paper titled “Zur Theorie der Gesellschaftsspiele” (On the Theory of Parlor Games), which introduced the concept of game theory. In this paper, he analyzed two-player zero-sum games where one player’s gain is equal to the other player’s loss.
Von Neumann’s work provided a mathematical framework for analyzing strategic decision-making where each player has complete information about the other player’s strategies. He also introduced the concept of minimax theorem which states that each player should choose a strategy that minimizes their maximum possible loss.
Impact on Economics
Von Neumann’s work on game theory had a significant impact on economics. It provided economists with a tool to analyze strategic interactions between firms and individuals in different markets. Game theory has been used to model various economic phenomena like oligopoly behavior, bargaining behavior, and auction behavior.
In conclusion, John von Neumann introduced the concept of game theory in 1928. His work has had a significant impact on various fields like economics, political science, and psychology. Game theory provides a mathematical framework for analyzing strategic decision-making between rational individuals and has become an essential tool in modern economics.