Game theory
Competition is a watchword of modern life. A competitive situation exists when two or more opposing parties are making decisions involving conflicting interests and wherein the action of one depends on the action which the opponent takes. Each opponent acts in a rational manner and tries to resolve the conflict in his own favor. Such situations arise in business, military operations, etc. Game theory is used to handle such conflicting situations. It seeks to provide a rational course of action in a conflicting situation. The term „game‟ represents a conflict between two or more parties. There can be several types of games, e.g. two-person and n-person games, zero-sum and non-zero-sum games, constant-sum games, cooperative and non-co-operative games, pure strategy games and mixed strategy games, etc. When there are two competitors playing a game, it is called a two-person game. If the number of competitors are N (N > 2), it is known as an N person game. When the sum of amounts won by all winners is equal to the sum of the amounts lost by all losers, we call it a zero-sum game. In a non-zero-game there
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exists a jointly preferred outcome. In other words, in a zero-game or a constant-sum game the sum of gains and losses of the game is zero. As opposed to this, if the sum of gains or losses is not equal to zero, we call it a non-zero-sum game. When the best strategy for each player is to play one particular strategy throughout the game, it is known as a pure strategy game. In case the optimum plan for each player is to employ different strategies at different times, it is called a mixed strategy game. When there is communication between the participants they may reach agreement and increase their pay-off through some forms of co-operative game, otherwise it is a non-co-operative game. Game theory may be defined as “a body of knowledge that deals with