Game theory is the study of strategies for decision-making in various situations, particularly in economics.
Game theory, a branch of mathematics, is the study of strategies for decision-making in various situations where players must make choices and receive payoffs based on the decisions made by other players. In the context of economic analysis, game theory is particularly used to analyze situations in which firms or countries interact and compete with each other. It helps economists understand and predict behaviors in competitive markets, monopolistic industries, negotiation of international trade agreements, and managing government budgets.