Game Theory

Game theory is the formal study of strategic interaction — situations where each player's payoff depends not only on their own action but also on the actions chosen by the other players. A game specifies the players, the strategies available to each, and the payoffs for every possible combination of strategies.

When to use

Use the game-theory framework whenever rational agents must decide while accounting for what other rational agents will decide. It is the language for oligopoly (Cournot Competition, Bertrand Competition, Stackelberg Model), bargaining, auction design, and any model where outcomes are interdependent.