The analogy I sometimes give is from logic. The word “game” has friendly, enjoyable associations – even though you may be trying to deal with issues like nuclear deterrence.”

“The choice of the name ‘theory of games’ was brilliant as a marketing device. I’ve spent a lot of my life thinking about it, but I don’t respect the claims that it has direct applications. I believe that game theory is very interesting. Now my views, I have to say, are extreme compared to many of my colleagues. I think it’s a very tempting idea for people, that they can take something simple and apply it to situations that are very complicated, like the economic crisis or nuclear deterrence. The associations are very light, not heavy, even though you may be trying to deal with issues like nuclear deterrence. It reminds us of our childhood, of chess and checkers, of children’s games. The word “game” has friendly, enjoyable associations. The choice of the name “theory of games” was brilliant as a marketing device. John Von Neumann, one of the founders of game theory, was not only a genius in mathematics, he was also a genius in public relations. That’s a central question: Is game theory useful in a concrete sense or not? Game theory is an area of economics that has enjoyed fantastic public relations. What are the applications of game theory for real life? But the body of knowledge that is known as game theory, at least up to now, has focused mainly on situations where the players are rational. In principle we could think about interactive situations where players are not fully rational, but nevertheless take into account or anticipate other players’ behaviour. Yes, classical game theory deals with situations where people are fully rational. What is special about game theory is that until now it has been assumed that when the players respond to the other players they respond rationally. But I can do it in many ways and I can respond in many ways. It’s not like a situation where I’m trying to decide whether to take an umbrella or not, and all I have to think about is the chance it will rain this afternoon. I want to get into the shoes of the other player or players – I want to enter their mind. These are situations when my reasonable behaviour depends on the way that I perceive or believe that the other participants in the situation will behave. The way I think about game theory is that it’s a part of economic theory, a set of models and concepts that is supposed to capture the way we think about strategic interactive situations. Foreign Policy & International Relations.

Real life uses for game theory