Game Theory in Real Life

A video game is a organized type of interactive play, normally undertaken for fun or entertainment, and at times used as an educational instrument. Most games are discrete, meaning that the player has only a limited number of objectives, but can affect the game environment in unique ways to give the experience of a real world. Most games are different from work, which usually is performed for monetary reward, and from literature, which may be more often an expression or aesthetic components.

Game design theory is concerned with the creative aspects behind video games. Game play has emerged as a central focus in creative industries since the advent of mass-marketing and digital technologies. Creative industries, such as film, television, music, and computer programming have found new ways to interact with each other and with consumers, by producing personal computer (PC) games that can be played by millions of people around the world. The history of video games goes back about 20 years, but recent advances in technology have brought about new levels of complexity and sophistication in game play. This process has also led to the increasing specialization of game design. One field of study includes ‘video game’ design, which studies the production, distribution, and public relations of video games.

Game theory considers two essential perspectives, namely the player perspective and the producers perspective. The player perspective is how a player perceives the game environment and their relation to the game. In most cases, players have a clear understanding of the objective and the means leading to that objective. The producers perspective is how the producers identify potential problems in the design, and how they attempt to solve these problems through game design strategies, through the use of non-cooperative game theory models, or through changes in the market for the purpose of increasing profit.

Non-cooperative game theory, on the other hand, studies how the distribution of risks and benefits in the game influences the satisfaction of players, producing a gain or loss in performance from the actions of all players. An obvious example of this is the prisoner’s dilemma. The prisoner’s dilemma arises when two agents are given different yet identical options; they can cooperate or defect. Prisoners quickly learn that if they defect, they will get severely punished; while if they cooperate, they will not suffer any punishment.

In this case, we can say that the prisoner’s dilemma develops because certain strategies are employed by players which help them maximize their profits. The problem is, if such game theory is applied to real-world situations, it can create counterproductive tendencies. For instance, in the business world, good players will tend to form monopolies and concentrate on a particular market, thereby reducing competition. As a result, everyone suffers, because no one can earn more unless they do precisely nothing. Hence, this is where non-cooperative game theory comes into play.

Non-cooperative game theory is basically concerned with two economic models, which can be used to understand the way real-world decisions are made: the standard economic model and the alternative economic models. Let us take the standard model, which says that individuals choose a random assignment so that each person’s value in the market is identically equal. Each person’s position in the economic network is therefore completely determined by chance. Then, the alternative economic model says that individuals act rationally in a pure state, where there is no such thing as natural interest. Individuals therefore have a reason to cooperate, even if it means they are going to pay higher taxes.