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Understanding Game theory

GAME THEORY
The strategic interaction between players in a game may often involve conflict or cooperation. It
can be used to determine optimal outcome from a set of choices. It was first used in economics
but has recently been applied in wireless communications. Give a discussion of the basic theory
and how it can be applied in a wireless network problem
Introduction
Game theory is the mathematical study of interaction among independent, self-interested agents
and the outcome of this interactions thereof. Game theory is used in diverse fields such as
economics, political science, biology, psychology, linguistics, sociology, computer science and
wireless communication [1].
Game theory entails the analysis of interactions within a group of
individual where the actions of each individual have an effect on the outcome that is of interest
to all. It therefore studies the strategic interaction within a group of individuals. Strategic
interactions mean that individuals know that their actions will have an effect on the outcome and
act accordingly [2].
The internal consistency and mathematical foundations of game theory make it a prime tool for
modeling and designing automated decision-making processes in interactive environments.
As a
mathematical tool for the decision-maker, the strength of game theory is the methodology it
provides for structuring and analyzing problems of strategic choice. The process of formally
modeling a situation as a game requires the decision-maker to enumerate explicitly the players
and their strategic options, and to consider their preferences and reactions [3].
A central assumption in many variants of game theory is that the players are rational. A rational
player is one who always chooses an action which gives the outcome he most prefers, which
suits him best, given what he expects his opponents to do. The goal of game-theoretic analysis is
to predict how the game will be played by rational players or to give advice on how best to play
the game against opponents who are rational [2]. Games can be sub-categorized into the
following categories;