Game Theory
The Basic Idea
The Milton Bradley board game, The Game of Life, was not far off the mark. In many ways, life does resemble a game, in which we are all players. There are rules to follow, opponents to compete with, and teammates to cooperate with. Game theory provides models for conceptualizing interactions among competing individuals. Despite its name, game theory is not exclusive to the study of games. It has a wealth of applications, from economics to psychology. This theory is applicable in any situation in which the actions of one party have influence over the actions of the other relevant parties. A key aspect of this theory is that it is based on certain assumptions, including that all involved parties understand the rules of the “game” and that people are rational decision-makers. Of course, humans have the capacity to err and we often make irrational decisions, which means that game theory is not infallible. As a general rule, however, it is a useful tool for predicting the outcomes of certain interactions between decision-makers.
[Game theory is] essentially a structural theory. It uncovers the logical structure of a great variety of conflict situations and describes this structure in mathematical terms. Sometimes the logical structure of a conflict situation admits rational decisions; sometimes it does not
– Anatol Rapoport
About the Authors
Dan Pilat
Dan is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. Dan has a background in organizational decision making, with a BComm in Decision & Information Systems from McGill University. He has worked on enterprise-level behavioral architecture at TD Securities and BMO Capital Markets, where he advised management on the implementation of systems processing billions of dollars per week. Driven by an appetite for the latest in technology, Dan created a course on business intelligence and lectured at McGill University, and has applied behavioral science to topics such as augmented and virtual reality.
Dr. Sekoul Krastev
Dr. Sekoul Krastev is a decision scientist and Co-Founder of The Decision Lab, one of the world's leading behavioral science consultancies. His team works with large organizations—Fortune 500 companies, governments, foundations and supernationals—to apply behavioral science and decision theory for social good. He holds a PhD in neuroscience from McGill University and is currently a visiting scholar at NYU. His work has been featured in academic journals as well as in The New York Times, Forbes, and Bloomberg. He is also the author of Intention (Wiley, 2024), a bestselling book on the science of human agency. Before founding The Decision Lab, he worked at the Boston Consulting Group and Google.
