Branch of applied mathematics that models interactions among agents where an agent’s choice and subsequent success depend on the choices of other agents that are simultaneously acting to maximize their own results or minimize their losses.
Sample Usage: Analysts used game theory to model terrorist behavior in response to potential security measures.
- Game theory can be used in the context of risk analysis to model strategic decisions and interactions of agents with conflicting interests to predict likely decision outcomes.
- A basic application of game theory involves two players and two strategy alternatives.
Source: DHS Risk Lexicon, U.S. Department of Homeland Security, 2010 Edition. September 2010 Regulatory Guidance