ABSTRACT
Game theory is a collection of mathematical models formulated to study decision making in situations involving conflict and cooperation. It recognizes that conflict arises naturally when various participants have different preferences, and that such problems can be studied quantitatively. Game theory attempts to abstract out those ingredients which are common and essential to many different competitive situations and to study them by means of the scientific approach. It is concerned with finding optimal solutions, stable outcomes, or equitable allocations when various decision makers have conflicting objectives in mind. These models describe how one should proceed in order to arrive at the best possible outcome in light of the options open to one's opponents. Game theory thus attempts to provide a normative guide to rational behavior when acting in a group whose members aim for different goals. In general, a game consists of players who must choose from a list of alternatives which will in turn bring about certain outcomes over which the participants may have different preferences. Chance and random events may also influence the final payoffs.
