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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Game theory | 1/13 | https://en.wikipedia.org/wiki/Game_theory | reference | science, encyclopedia | 2026-05-05T03:56:32.715747+00:00 | kb-cron |
Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed two-person zero-sum games, in which a participant's gains or losses are exactly balanced by the losses and gains of the other participant. In the 1950s, it was extended to the study of non zero-sum games, and was eventually applied to a wide range of behavioral relations. It is now an umbrella term for the science of rational decision making in humans, animals, and computers. Modern game theory began with the idea of mixed-strategy equilibria in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original proof used the Brouwer fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by Theory of Games and Economic Behavior (1944), co-written with Oskar Morgenstern, which considered cooperative games of several players. The second edition provided an axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat decision-making under uncertainty. Game theory was developed extensively in the 1950s, and was explicitly applied to evolution in the 1970s, although similar developments go back at least as far as the 1930s. Game theory has been widely recognized as an important tool in many fields. John Maynard Smith was awarded the Crafoord Prize for his application of evolutionary game theory in 1999, and fifteen game theorists have won the Nobel Prize in economics as of 2020, including most recently Paul Milgrom and Robert B. Wilson.
== History == Discussions on the mathematics of games began long before the rise of modern, mathematical game theory. Cardano wrote on games of chance in Liber de ludo aleae (Book on Games of Chance), written around 1564 but published posthumously in 1663. Influenced by the work of Fermat and Pascal on the problem of points, Huygens developed the concept of expectation on reasoning about the structure of games of chance, publishing his gambling calculus in De ratiociniis in ludo aleæ (On Reasoning in Games of Chance) in 1657. In 1713, a letter attributed to Charles Waldegrave, an active Jacobite and uncle to British diplomat James Waldegrave, analyzed a game called "le her". Waldegrave provided a minimax mixed strategy solution to a two-person version of the card game, and the problem is now known as the Waldegrave problem. In 1838, Antoine Augustin Cournot provided a model of competition in oligopolies. Though he did not refer to it as such, he presented a solution that is the Nash equilibrium of the game in his Recherches sur les principes mathématiques de la théorie des richesses (Researches into the Mathematical Principles of the Theory of Wealth). In 1883, Joseph Bertrand critiqued Cournot's model as unrealistic, providing an alternative model of price competition which would later be formalized by Francis Ysidro Edgeworth. In 1913, Ernst Zermelo published Über eine Anwendung der Mengenlehre auf die Theorie des Schachspiels (On an Application of Set Theory to the Theory of the Game of Chess), which proved that the optimal chess strategy is strictly determined.
=== Foundation ===
The work of John von Neumann established game theory as its own independent field in the early-to-mid 20th century, with von Neumann publishing his paper On the Theory of Games of Strategy in 1928. Von Neumann's original proof used Brouwer's fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. Von Neumann's work in game theory culminated in his 1944 book Theory of Games and Economic Behavior, co-authored with Oskar Morgenstern. The second edition of this book provided an axiomatic theory of utility, which reincarnated Daniel Bernoulli's old theory of utility (of money) as an independent discipline. This foundational work contains the method for finding mutually consistent solutions for two-person zero-sum games. Subsequent work focused primarily on cooperative game theory, which analyzes optimal strategies for groups of individuals, presuming that they can enforce agreements between them about proper strategies. In his 1938 book Applications aux Jeux de Hasard and earlier notes, Émile Borel proved a minimax theorem for two-person zero-sum matrix games only when the pay-off matrix is symmetric and provided a solution to a non-trivial infinite game (known in English as Blotto game). Borel conjectured the non-existence of mixed-strategy equilibria in finite two-person zero-sum games, a conjecture that was proved false by von Neumann.
In 1950, John Nash developed a criterion for mutual consistency of players' strategies known as the Nash equilibrium, applicable to a wider variety of games than the criterion proposed by von Neumann and Morgenstern. Nash proved that every finite n-player, non-zero-sum (not just two-player zero-sum) non-cooperative game has what is now known as a Nash equilibrium in mixed strategies. Game theory experienced a flurry of activity in the 1950s, during which the concepts of the core, the extensive form game, fictitious play, repeated games, and the Shapley value were developed. The 1950s also saw the first applications of game theory to philosophy and political science. The first mathematical discussion of the prisoner's dilemma appeared, and an experiment was undertaken by mathematicians Merrill M. Flood and Melvin Dresher, as part of the RAND Corporation's investigations into game theory. RAND pursued the studies because of possible applications to global nuclear strategy.