econ-game-theory
Game Theory Basics
Overview
Game theory models strategic interactions where each player's outcome depends on others' choices. It provides tools to predict behavior, identify stable outcomes (equilibria), and design mechanisms that align incentives.
Framework
IRON LAW: Define Players, Strategies, and Payoffs BEFORE Analyzing
Every game requires three elements explicitly defined:
1. Players — who are the decision-makers?
2. Strategies — what choices does each player have?
3. Payoffs — what does each player get for each combination of choices?
Analyzing a "game" without a payoff matrix is just storytelling.
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