Explain the concept of game theory.

Economics Supply And Demand Questions



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Explain the concept of game theory.

Game theory is a branch of economics that analyzes strategic interactions between individuals or groups. It involves studying the decisions and behaviors of rational players in situations where the outcome of one's decision depends on the decisions of others. Game theory provides a framework to understand and predict how individuals or firms make choices in competitive or cooperative situations, taking into account the potential actions and reactions of others. It helps in analyzing various economic phenomena, such as pricing strategies, negotiations, auctions, and market competition.