Study of Interdependence. Studies interaction among a group of players who make rational choices based on a strategic analysis of what others in the group might do.

History

Early predecessors

economic analysis of imperfectly competitive market.
Augustin Cournot 1833
Francis Edgeworth 1881

Modern

  1. Ernst Zermelo - Zermelo's theorem

Statement

In Chess, either White can force a win, or Black can force a win, or both sides can force a draw.

  1. John von Neumann
    Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern
  2. John Nash
    Nash Equilibrium
    Zero_Sum_Games to Nonzero_Sum_Games
  3. John Harsanyi and Reinhard Selten

Rules of Game

Rules have to specify 4 things

  1. Who is playing
  2. What are they playing with - the alternative actions, or choices, the strategies, that each player has available
  3. When each player gets to play - in what order
  4. How much they stand to gain (or lose) from the choices made in the game

Assume Common Knowledge about the rule

Representation

Normal Form

or Strategic Form

Extensive Form