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Sensible decision-making is critical for the success of projects. In project management, game theory is used to model the decision-making process of players, such as investors, project managers, contractors, sub-contractors, governments and customers.
Behavioral game theory seeks to examine how people's strategic decision-making behavior is shaped by social preferences, social utility and other psychological factors. [1] Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory, [2] experimental economics, and experimental psychology.
In game theory, a Bayesian game is a strategic decision-making model which assumes players have incomplete information. Players may hold private information relevant to the game, meaning that the payoffs are not common knowledge. [1] Bayesian games model the outcome of player interactions using aspects of Bayesian probability.
The prisoner's dilemma is a game theory thought experiment involving two rational agents, each of whom can either cooperate for mutual benefit or betray their partner ("defect") for individual gain. The dilemma arises from the fact that while defecting is rational for each agent, cooperation yields a higher payoff for each.
The game of Wald's maximin model is also a 2-person zero-sum game, but the players choose sequentially. With the establishment of modern decision theory in the 1950s, the model became a key ingredient in the formulation of non-probabilistic decision-making models in the face of severe uncertainty.
The classical explanation of the ultimatum game as a well-formed experiment approximating general behaviour often leads to a conclusion that the rational behavior in assumption is accurate to a degree, but must encompass additional vectors of decision making. [23]
Chemical game theory is an alternative model of game theory that represents and solves problems in strategic interactions, or contested human decision making. Differences with traditional game theory concepts include the use of metaphorical molecules called “knowlecules”, [1] [2] which represent choices and decisions among players in the game.
Game theory was originally conceived as a mathematical analysis of economic processes and indeed this is why it has proven so useful in explaining so many biological behaviours. One important further refinement of the evolutionary game theory model that has economic overtones rests on the analysis of costs.