Game Theory

Game Theory is a theory which is applicable in almost all the fields. It provides a formal language for the representation and analysis of interactive situations, that is, situations where several "entities", called as players varies depending on the context in which the game theoretic language is invoked. 

Game theory has major influence on the development of several branches of economics (industrial organisations, international trade, labor economics, macroeconomics etc.,). Over the time the impact of game theory extended to other branches of social sciences (political science, international relations, philosophy, sociology, anthropology, etc.,), as well as to fields outside social sciences, such as biology, computer science, and logic etc.,.

The main significance of game theory is to formulate an alternative strategy to compete with one another. It is also used one of the main decision making strategy. 

For example, in evolutionary biology players are non-thinking living organisms, in computer science players are artificial agents, and in behavioural game theory players are "ordinary" human beings. Traditionally, however, game theory has focused on interaction among intelligent, sophisticated, and rational individuals. 

Game theory is divided into two parts

1. The Cooperative game theory (CGT): CGT assumes that the players can communicate, form coalitions, and sign binding agreements
2. The Non-cooperative game theory (NCGT): NCGT models situations where the players are either unable to communicate or are able to communicate but cannot sign binding contracts.