Page 198 - Probability Demystified

11
CHAPTER

Game Theory

Introduction

Probability is used in what is called game theory. Game theory was developed
by John von Neumann and is a mathematical analysis of games. In many
cases, game theory uses probability. In a broad sense, game theory can be
applied to sports such as football and baseball, video games, board games,
gambling games, investment situations, and even warfare.

Two-Person Games

A simplified definition of a game is that it is a contest between two players
that consists of rules on how to play and how to determine the winner.
A game also consists of a payoff. A payoff is a reward for winning the game.
In many cases it is money, but it could be points or even just the satisfaction
of winning.
Most games consist of strategies.A strategy is a rule that determines a
player’s move or moves in order to win the game or maximize the player’s

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