Game Theory Analysis: John Nash, Applications, and Issues Explored

This essay provides an overview of game theory, a framework for understanding strategic interactions among competing players. It discusses the contributions of pioneers like John von Neumann and John Nash, focusing on the development of optimal decision-making strategies. The essay explores the core concepts, including players, strategies, payoffs, and equilibrium, with a particular emphasis on Nash Equilibrium and its implications for non-cooperative games. It identifies key issues within the theory, such as the assumption of perfect knowledge and the practicality of predicting player behavior. The essay also examines technical applications of game theory in economics, politics, and engineering projects, providing examples such as the use of the prisoner's dilemma in political contexts. Finally, it highlights the contributions of other significant figures and offers an analysis of different types of game theories useful in today's society.

Running head: GAME THEORY
GAME THEORY
Name of the Student
Name of the University
Author’s Note

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Discuss the game theory
Game theory is concerned with the theoretical framework which is focused on conceiving
social situations in between the competition players. It is stated that game theory is mainly
focused on the platform of science and strategy development. Performing optimal decision
making is also one of the major aspect that is considered. Performing proper decision making
and being independent of the actors as per strategic setting. The pioneers of Game Theory are
namely John von Neumann and John Nash. Oskar Morgenstern, who has been an economist was
also considered as one of the pioneers of the Game theory.
Game theory is based on developing a proper modelling of the interactive situations and
hence wise providing proper connectivity in between the players. Paying off contingent as per
the strategies by players will ensure that proper assessing strategy implementation by the other
players participating in the process (Bauso 2016). This theory is also concerned with the
sectioning of the identities of the players and hence wise perform proper assessment of the
strategies that can be taken up by the players and the outcomes that will be generated due to the
implementation of the stated strategies will also be considered. Performing proper estimation of
the outcomes is also one of the major concern of the Game Theory. The sections that are
included functioning of the Game Theory includes evolutionary biology, politics, economics,
business and psychology.
Understanding the psychology of the target audience has been the major concern of the
Game Theory. Understanding this aspect will help in bettering the functioning of the young and
developing science. In case of proper definition of Game Theory considering more than more
than one player, performing quantifiable consequences acts important in the project (Geckil &
Anderson 2016). Quantifiable consequences are considered as important for proper estimation of

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the outcomes. The terms that are considered in this case are Game, Players, Strategy, Payoff,
Information set and Equilibrium.
Write about the various issues of game theory.
There are 3 major issues in the processing of the game theory. The issues present in the
game theory are as follows: -
 In Game theory, it assumes that all the firms has the knowledge of strategies of the player
that is against them. This estimation includes the fact that payoff matrix is easy to
construct according to the game theory. This estimation is highly unrealistic. This
assumption is not only unrealistic but also highly unpractical in nature (Telser 2016). It is
often seen that the entrepreneur is unaware of the strategy that of his organization,
leaving aside the strategies that are used by his rival organizations.
 As per the theory of Game theory the main aspect that is considered is that it predicts that
both duopolists are prudent men. It is also assumed that in every move that is taken by a
player will be well analyzed by the other player and hence perform in accord to the
theories. This is also unreal because the entrepreneurs are not always radical in nature.
This leads to the fact that problem caused cannot be resolved (Dresher, Shapley & Tucker
2016).
 Following the strategy of the rivals is highly impractical as there is an infinite chain to the
counter strategy that can be adopted as per the data assessment.
Make particular reference to John Nash's contribution.
Nash Equilibrium is the main contribution of John Forbes Nash. Nash provided a solution
for the non cooperative games that involves more than 2 players at an instance. This helps in

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better assessment of equilibrium strategies that will help in understanding the strategies and
hence wise perform proper assessment and hence wise changing of the strategies of the players
can be performed. As per the game theory, in case a strategy is chosen, the player will not get
benefitted by changing the strategy till there is no alteration in the strategies from the other end.
In that case the present strategy along with their corresponding payoff falls under the section of
Nash Equilibrium (Colman 2016). The basic examples that can be considered for the Nash
Equilibrium incudes Coordination game, Prisoner’s dilemma, Network traffic, competition game
and Nash Equilibria in the payoff matrix. Stability of the Nash equilibrium is highly dependent
on the players who have not changed are supposedly lacking in new strategies under the
circumstances. Another aspect that is considered players who did changed the strategy is playing
in a worse manner. In case both of these aspects are met, then the player who is having smaller
change in the mixed strategy, returns to the Nash Equilibrium in immediate basis (Aumann
2019). Stability of the Nash Equilibrium is stated to be high only when both the conditions
proves to be true. The equilibrium is considered to be false, only when the first case does not
occur. Again in case only the first strategy occurs it is stated that there will be an infinite number
of optimal strategies for the player.
Provide technical application and cite examples.
Game theory finds its application in the economics and business in engineering projects,
politics, as well as in construction projects.
 In case of the usage of game theory in economics, it is seen that the economists use this
terminology as a tool that is used for analyzing economic aspect, namely the bargaining,
voting theory and mechanism designing (Myerson 2013).

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 In case of politics prisoner’s dilemma is used for focusing on situation when the
government needs to choose in between the active and the reactive counter terrorism.
 In case of construction projects, usage of fuzzy matrix game is seen which enhances the
functional process.
Other than John Nash, who else has made significant contribution in Game Theory?
Other than John Nash, John von Neumann and Oskar Morgenstern have made highly
significant contribution to Game Theory.
Offer some analyses and outlook of the theory.
After performing analysis, it can be stated that there are 5 types of game theories that are
actually useful in today’s society. Those types includes cooperative and non-cooperative games,
Normal form and extensive form games, Simultaneous move games and Sequential move games,
Constant sum, zero sum and Nin zero sum games and lastly Symmetric and Asymmetric games.

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References
Aumann, R. J. (2019). Lectures on game theory. CRC Press.
Bauso, D. (2016). Game theory with engineering applications. Society for Industrial and Applied
Mathematics.
Colman, A. M. (2016). Game theory and experimental games: The study of strategic interaction.
Elsevier.
Dresher, M., Shapley, L. S., & Tucker, A. W. (Eds.). (2016). Advances in Game Theory.(AM-
52) (Vol. 52). Princeton University Press.
Geckil, I. K., & Anderson, P. L. (2016). Applied game theory and strategic behavior. Chapman
and Hall/CRC.
Myerson, R. B. (2013). Game theory. Harvard university press.
Telser, L. G. (2016). Competition, collusion and game theory. Springer.