Defining Game Theory in Economics

545 Words Jan 6th, 2018 2 Pages
Game theory is a mathematical approach to economics which uses a special language and notation. Specifically, the chapter explains that games theory studies the strategies that people use when they make decisions. There is strategy employed any time a person makes a decision, whether or not they themselves are aware that they are employing any type of strategy. Indeed, this strategizing is often subconscious because we have trained our brains from birth to make choices and by the time people reach adulthood these strategies have become ingrained in the mind to the point where they can be subconsciously activated. The author further asserts that by playing games where strategy is employed instead of games which are based on probability will further the brains ability to strategize and assist them mentally in other areas. John von Neumann, who McDonald credits with the formulation of game theory attempted to apply all his theories in this to physical gaming, explaining that by fully understanding the best strategies possible, then the individual would always win the game, whether actual or metaphorical.
Tactics Employed: McDonald makes the assertion that a Sherlock Holmes story utilizes game theory. The matching pennies technique is a model for the kind of problem solving performed by Holmes in his adventures. It is used to help…

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