Game theory is the study of mathematical models of negotiation, conflict and cooperation between individuals, organizations and governments. The study has direct applications in contract theory, economics, sociology and psychology.
Game theory is applied in various areas of study to understand why an individual makes a particular decision and how the decisions made by one individual affect others. The application of game theory concepts and techniques to non-game activities is known as gamification.
Game theory research involves studies of the interactions among people or groups of people. Because people make use of an ever-increasing number and variety of technologies to achieve desired ends, game theory can be directly applied in areas of negotiation, such as contract theory and indirectly applied in practical pursuits such as engineering, information technology and computer science.
So-called games can range from simple personal or small group encounters or problems to major confrontations between corporations or superpowers. One of the principal aims of game theory is to determine the optimum strategy for dealing with a given situation or confrontation. This can involve such goals as maximizing one's gains, maximizing the probability that a specific goal can be reached, minimizing one's risks or losses, or inflicting the greatest possible damage on adversaries.
Game theory was first devised by John Von Neumann. Later contributions were made by John Nash, A. W. Tucker, and others.