Game theory and its program research paper

Decision Theory, Economic Theory, College Entry, College Program

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Game theory is a concept that entails formal study of cooperation, issue and activities taken up by several interdependent agents. Video game theory as being a concept lies down the structure that encourages through examination an understanding in the strategic choices agents choose[footnoteRef: 1]. The earliest conceptualization of video game theory is by Cournot in 1838 where analysis sought to simplify choices and actions taken in a duopolistic market [footnoteRef: 2]. Over the years, hunt for the game theory incorporates industry equilibrium entailing economic interpersonal and politics decisions. Like a decision making tool, game theory involves the usage of mathematical concepts to analyze proper choices and problems. The choice making process enables enumeration of the players ideal options taking into consideration preferences and responses[footnoteRef: 3]. [1: Gibbons, and Robert. Game Theory for Applied Economists. Princeton, NJ.: Princeton University Press, 1992. Gibbons, and Robert. Game Theory for Used Economists. Princeton, NJ.: Princeton University Press, 1992. ] [2: Rasmusen, and Joshua. Games and Information: An intro to Video game Theory, 3 rd Ed.. Oxford: Blackwell, 2001] [3: Ibid 1]

Application of Game Theory in Auctions

The most common type of market is the climbing bid open auction. This is when an object is definitely put up available for sale with would-be declaring determination until there is only one prospective buyer left. This presents a straightforward game decision strategy. There is also a complicated decision strategy in auctions in which willing customers submit prices for bids for a product privately. Once all bids are received, the auctioneer awards the merchandise to the excessive bidder at the second top price. With this situation, the perfect decision method for the buyers is to offer their actual value pertaining to the item as their bid. This strategy is the poor dominant technique since it is the one more likely to yield ideal gain towards the players whether or not the win the bid.

The optimal option for the bidders in the second price auction is to provide one’s own value to get the item. This is so seeing that if a single bid below their worth for their item and win the action they will shell out the second greatest bid. In such a case, they have optimal outcome while there is a probability that the item will go to someone else for a price less than