Game theory

: This article discusses the mathematical modelling of incentive structures. For other games (and their theories) see Game (disambiguation). For the band named Game Theory, please see Game Theory (band).

History

Though touched on by earlier mathematical results, modern game theory became a prominent branch of mathematics in the 1940s, especially after the 1944 publication of The Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern. This profound work contained the method -- alluded to above -- for finding optimal solutions for two-person zero-sum games.

Related Topics:
1940s - 1944 - John von Neumann - Oskar Morgenstern

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Around 1950, John Nash developed a definition of an "optimum" strategy for multi-player games where no such optimum was previously defined, known as Nash equilibrium. Reinhard Selten with his ideas of trembling hand perfect and subgame perfect equilibria further refined this concept. These men won The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel (also known as The Nobel Prize in Economics) in 1994 for their work on game theory, along with John Harsanyi who developed the analysis of games of incomplete information.

Related Topics:
1950 - John Nash - Nash equilibrium - Reinhard Selten - Trembling hand - Subgame perfect equilibria - The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel - John Harsanyi

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Research into game theory continues, and there remain games which produce counter-intuitive optimal strategies even under advanced analytical techniques like trembling hand equilibrium. One example of this occurs in the Centipede Game, where at every decision players have the option of increasing their opponents' payoff at some cost to their own.

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Some experimental tests of games indicate that in many situations people respond instinctively by picking a 'reasonable' solution or a 'social norm' rather than adopting the strategy indicated by a rational analytic concept.

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The finding of Conway's number-game connection occurred in the early 1970s.

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