Talmudic solutions to bankruptcy issues and other practical problems Operations research before and in 19th century
And, what is more important, it would help to disabuse wishful lawmakers of predictions of outcomes that are deemed unreasonable in light of the analysis. An analysis of such a game can help determine the best code from the lawmakers' viewpoint. Thus, the lawmakers and citizens can be viewed as playing a game. Based on that, citizens and corporations choose actions, given the tax code. For example, the tax code can be viewed as a choice of lawmakers. If one of the players can “go” (act) first and choose an action that he can commit to, then it is possible to come up with choices that will ensure outcomes favorable to the first player. There is another potential use of game theory. Such a model can help to explain observations involving multiperson decision-making situations, and can also rule out certain outcomes that might not otherwise be contemplated. The value of game theory, then, lies in its ability to model the interaction between players. As a result, it is generally difficult to define the best outcome from the view of all players. In other words, game theory is concerned with specifying actions for all players, ensuring that for each player, his/her chosen actions are optimal, given the actions of other players, implying that optimality is relative. Thus, game theory cannot prescribe an optimal action for an individual player without also offering a way for each player to anticipate what other players would choose. The utility resulting from a player's action cannot be determined without also taking into account the actions chosen by other players. But there are many differences between the two. In this sense, game theory may be viewed as a generalization of single-person decision theory to multiperson decision making. Players are assumed to choose actions to maximize their expected utility, following the accepted model of single-person decision making. These entities are called players, even though the decisions that they make are in the context of situations with real-world consequences, quite different from the entertainment that parlor games yield. The word “game” is an apt one to describe this because, just as in common parlor games such as Chess or Hex, much of game theory is concerned with how individual entities (persons, or organizations) choose actions, taking into account how other participants do the same. Game theory can be viewed in terms of its mathematics or as a tool to model the interaction between decision makers.
Rao, in Encyclopedia of Social Measurement, 2005 Why Game Theory?
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