Game Theory and Strategic Decision-Making in Economic Systems

Abstract

Game theory is a mathematical framework used to analyze strategic interactions among individuals, firms, or organizations where the outcome for each participant depends on the decisions made by others. It has become an important tool in economics for understanding competitive behavior, cooperation, and decision-making in situations involving multiple decision-makers. By using mathematical models, game theory helps explain how rational participants choose strategies in order to maximize their benefits while considering the possible actions of others. the role of game theory in strategic decision-making within economic systems. Concepts such as Nash equilibrium, dominant strategies, and payoff matrices are used to analyze how economic agents make decisions under conditions of competition and uncertainty. These models help explain behaviors observed in markets, including pricing strategies, market competition, negotiation processes, and resource allocation.