![]() That's because people have different tastes, preferences, and budgets. When a trade occurs, it improves that allocation. It’s the study of allocating scarce resources. But, contrary to popular belief, economics isn't the study of money. ![]() After all, one person gets the other person’s money. It ‘s tempting to think that the exchange of goods is zero-sum. In economic theory, most games aren't zero-sum. The Nash equilibrium remains a relevant and important finding. John Nash was among the notable thought leaders of the time and developed a proof that expanded the applicability of game theory solutions. Its application grew across many fields, from nuclear physics to political science. The 1950s saw a flood of interest in game theory. In 1944, the two wrote Theory of Games and Economic Behavior, which drew heavily on Von Neumann’s 1928 paper titled On the Theory of Games and Strategy. But it was John Von Neumann and Oskar Morgenstern who wrote the book on the subject. ![]() Other notable works advanced the scientific community’s knowledge of strategy. What he describes is now known as a Nash equilibrium. In his 1838 work titled Researches into the Mathematical Principles of the Theory of Wealth, Cournot presents a solution to a pricing problem between competing firms. The details are shaky, but the letter solves a two-person card game.Īntoine Augustin Cournot is also sometimes given credit as a founder of zero-sum game theory. The first known written discussion on the topic seems to be a letter between Charles and James Waldegrave in 1713. Game theory has probably existed informally for a long time.
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