A Survey of Game Theory Applications in Turkey

The Fundamentals Of Game Theory

As a collection of models, game theory investigates the interaction and the strategy of decision makers. The following is a list of some situations involving conflict and competition in which game theory is used (Osborne, 2004):

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  Firms competing for business

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  Political candidates competing for votes

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  Competing experts’ incentives to provide correct diagnoses

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  The role of threats and punishment in long-term relationships

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  The evolution of siblings’ behavior towards each other

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  Jury members deciding on a verdict

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  Animals fighting over prey

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  Legislators’ voting behavior under pressure from interest groups

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  Bidders competing in an auction

Game theory is concerned with finding the best actions for individual decision makers² in above-mentioned situations and recognizing stable outcomes, mostly, from the perspective of an external observer (Liqiang et al., 2007). Every game is constructed on the basis of three elements (MacKenzie & Wicker, 2001):

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  Strategic interaction

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  Constraints on the actions

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  The interests of the players