| Core Concept |
| Developed by John von Neumann
Views the source of uncertainty as the intentions of others
Attempts to create non-zero sum games where no-one wins, no-one looses, but all parties benefit |
| Nash Equilibrium |
| A stable outcome that is less than optimal for all parties
e.g. Spectrum auctions, designed to prevent destructive competitive bidding |
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| Rationality |
| Uses the classical model of rationality, people will make the best decisions to serve their best interests.
Game theory has problems when people behave irrationally (e.g. make mistakes) |
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| Strategies |
| The fundamentals of game theory |
| Consensus |
| An example strategy: when assessing a market price look for narrow trading bands, this indicates a consensus view |
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