Behavioral game theory : towards a realistic representation of strategic behavior?
The domain of strategic interaction includes all those decision tasks in which the
outcome of a decision depends on the decisions taken by a plurality of individuals,
so that each individual must try to devise the most likely moves of the others
in order to pursue the best course of action, knowing that all other actors are
engaged in the same type of strategic thinking. Problems of strategic interaction
in economics have been traditionally modelled using the formal language of game
theory, first introduced by von Neumann and Morgenstern’s 1944 seminal book
Theory of Games and Economic Behavior. Game theory subsequently developed
into a highly formal mathematical language used to describe the behavior of hyperrational
individuals in strategic contexts. Although born as a branch of applied
mathematics and originally developed with the intention of making it the science
of military conflict, its diffusion within economics has been extremely rapid, and
related fields in the social sciences have recently begun to apply it to model behavior
in a variety of social settings.
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