Game Theory
Categories: Financial Theory
Watch the last 15 minutes or so of Wargames with Matthew Broderick. Pretty much game theory in a nutshell.
Game theory is the study of how people play (ostensibly) fair games based on how each decision they might make either benefits or costs them. In its strictest sense, game theory assumes players will make moves that either benefit them the most or cost them the least, depending on how much they’re willing to lose.
Companies often employ game theorists to predict how other companies will react to the release of new products, marketing strategies, or various other business decisions.
Anybody up for a nice game of Global Thermonuclear War? No? You wanna play chess instead? Figures.