# Game Theory and the Prisoner's Dilemma

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Game Theory and the Prisoner’s Dilemma Business Strategy
Antoinette Monteiro
Grand Canyon University
DBA 815
January 13, 2016

The Definition of Game Theory The game is the object of game theory, which is an interactive situation. There are several players involved in the situation; a game with only one person is a decision problem. According to game theory, the players, their preferences, their information, the strategic actions available to them, affects the outcome. Game theory is conflict and cooperation; the agents are interdependent on the actions of others. These agents are individuals, groups, firms or a combination of these combined. Game theory provides a language to formulate, structure, analyze and understand different circumstances (Turocy and Stengel, 2001 p.4).
History and Effects of Game Theory An example of game analysis is the idea of two players dominating the marketplace which was introduced by Antoine Cournot in 1838. Emile Borel, a mathematician proposed a game theory in 1921 and this research was expanded by Neumann in 1928 called the “theory of parlor games.” This theory was solidified in the publication, “The Theory of Games and Economic Behavior by Neumann and Morgenstern. This book pioneers the basic terms and problems that are still in use to this day (Turocy and Stengel, 2001, p.4).
The mathematician, John Nash showed that finite games have an equilibrium point in which players choose actions which give the best outcome for themselves due to their oppositions choices. This is a main point in non-cooperative game theory since his analysis; then game theory expanded and applied to war and politics. Game theory has driven a revolution in economic theory. Game theory has been applied in sociology, psychology, and with evolution and biology. Game theory has been prominent since the 1970s and has been applied to

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