Today we will learn about a topic that sounds the most interesting, ‘Game Theory.’ Do not get disappointed because the game theory is not about video games; instead, it is a branch of applied mathematics that allows us to analyze specific situations. Game theory tries to explain how people make decisions and actions for the best outcome in given cases. In game theory, the situation is called a game. All people make decisions that will benefit them; accordingly, there are interactions among people, trying to make the best decisions for their benefit. In this article, we will learn only the basic concepts of game theory. Let’s learn more about the theory through an example.

In CuriouSTEM company, there is an employee who requested his/her pay to be raised. Now, the CEO has two options, one is acceptance, and the other one is refusal. If the CEO refuses to raise the employee’s salary, the employee might quit work and go to another company. Therefore, the CEO tries to make a reasonable decision while the employee has the hope for his/her pay to be raised. In this game, the employee and CEO are independent beings that have an influence on each other’s decision making.

One of the most well-known game theories is the chicken game. I believe that many of you have heard of this term at least once. For those of you who have not heard this term before, the chicken game means when companies compete with each other until only one survives in one industry. Like the chicken game, there are many ideas that are famous that are related to game theory. I recommend searching for more concepts if you have time.