Game Theory

What is Game Theory?

In layman's terms, game theory is the study of micro-situations where each situation demands a decision that "optimizes" the action. The optimizing decision will depend on the decisions of the others. It is referred to as "game theory" specifically because of motivational reasons. We know that games are where decisions of each action lead to some reaction and a unique outcome. 

Originally, it addressed zero-sum games, in which one person's gains result in losses for the other participants. Today, game theory applies to a wide range of behavioral relations, and is now an umbrella term for the science of logical decision making in humans, animals, and computers.

Chronological progression

Early discussions of examples of two-person games occurred long before the rise of modern, mathematical game theory. The first known discussion of game theory occurred in a letter written by Charles Waldegrave, an active Jacobite, and uncle to James Waldegrave, a British diplomat, in 1713. Game theory was later explicitly applied to biology in the 1970s, although similar developments go back at least as far as the 1930s. 

Combinatorial Games

Games in which the difficulty of finding an optimal strategy stems from the multiplicity of possible moves are called combinatorial games. Examples include chess and go. Games that involve imperfect information may also have a strong combinatorial character, for instance backgammon. There is no unified theory addressing combinatorial elements in games. There are, however, mathematical tools that can solve particular problems and answer general questions.


Game Theory is one of the most fascinating and little-explored fields of study today. Its broadness makes it applicable to all kinds of situations, from relationships to job hunting to evolution to urban planning to financial trading algorithms to politics to war. If you combine the power of this tool with the capacity of computers to carry out calculations and the amount of data we have available, game theory can easily become one of the strongest fields in the following decades.