Game Theory

As mentioned in “Thinking Strategically,” we are surrounded by active decision-makers whoses choices interact with ours. The interaction has an important effect on our thinking and actions. The book “Game Theory at Work” talks about real-life situations that game theory comes into place. We are essentially utilizing game theory knowledge when we decide to accept an offer or not or when we ask to increase the salary. While tradiational game theory assumes agents are fully rational, we observe in real-life that is not the true story. People have emotions and limited foresight when they play games. The author of the book “Behaviroal Game Theory” uses psychological principles and hundreds of experiments to develop mathematical theories of reciprocity, limited strategizing, and learning, which help predict what real people and companies do in strategic situations.