Game Theory


Game Theory

Game theory is the study of choices and outcomes used in many disciplines including mathematics, finance, economics, and DeFi. It provides tools for analyzing situations that are interdependent- meaning each participant considers an opponents choices in formulating a strategy. Game theorists study the rational decision-making of each player rather than by pure chance. (R1)

Terms commonly used in the study of game theory (R2):

  • – Game: Any set of circumstances that has a result dependent on the actions of two of more decision-makers (players).
  • – Players: A strategic decision-maker within the context of the game.
  • – Strategy: A complete plan of action a player will take given the set of circumstances that might arise within the game.
  • – Payoff: The payout a player receives from arriving at a particular outcome. The payout can be in any quantifiable form, from dollars to utility.
  • – Information set: The information available at a given point in the game. The term information set is most usually applied when the game has a sequential component.
  • – Equilibrium: The point in a game where both players have made their decisions and an outcome is reached.


  • – Jury selection
  • Counter-Party Risk
  • – Product and service pricing
  • – Business and military strategy
  • – Equities and commodity trading
  • – The behavior of animals in the wild

game theory P2E strategy web3 3109

Chess Picture: Photo by Hassan Pasha on Unsplash

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