You might think that game theory is an abstract concept relevant only to economists, mathematicians, or theorists. However, the reality is that the principles of game theory are deeply embedded in our daily lives. Every day, we make decisions that involve a certain degree of strategy and consideration of possible responses from others.
Below you can find a list of quite common situations in every day life where game theory can help you making a winning choice.
- Deciding to Make an Offer on a House
You have to decide how much to offer, knowing that other people might make competing offers. Your goal is to secure the house without overpaying. This scenario introduces auction theory, which helps you understand how to formulate your bid to maximize your chances of success without exceeding your budget. Insights from auction theory can also reveal how to interpret signals from other bidders and when to strategically place your bid. Auction theory examines different types of auctions, such as English auctions, Dutch auctions, and sealed-bid auctions, each providing strategies on how to approach the bidding process effectively.
- Collaborating with Colleagues
In a group project, you need to decide how much effort to contribute, balancing your desire for success with the need…
