Economics Game Theory In Behavioral Economics Questions
Game theory is a branch of economics that studies strategic decision-making in situations where the outcome of one's choices depends on the choices of others. It provides a framework to analyze and understand the behavior of individuals or firms in competitive or cooperative situations.
In behavioral economics, game theory is applied to study how individuals make decisions in real-world situations, taking into account their cognitive biases, emotions, and social preferences. It helps economists understand and predict human behavior by considering factors such as trust, reciprocity, fairness, and social norms. By incorporating insights from psychology and sociology, game theory in behavioral economics provides a more realistic and nuanced understanding of economic decision-making.