“What exactly is Game Theory?”
It is the study of strategy based on math and rational agents. The rational agents are entities that act rationally and optimally.
Life Application/Analogy
Think of it as a game of Monopoly.
You have the money to build hotels, but you notice you’re about to enter a hotel-heavy street with the risk of going bankrupt if you spend a large sum of money building hotels. So, in this natural case of game theory you decide against it as it is the rational decision to make.
How do I remember it?
In my head I think “Okay, game theory has the word game in it. So, it’s like I’m playing a game and in a game I use all the surrounding details to make the best decision. So, it’s the study of acting rational and optimal.”
