Can game theory really predict how people will behave in different situations?
Yes, game theory provides a framework for understanding strategic interactions among individuals, helping to predict behavior.
Can you give me an example of game theory in real life?
Sure! The Prisoner's Dilemma is a classic example where two individuals must decide whether to cooperate or betray each other.
How does this apply to economics?
In economics, game theory helps analyze competitive behaviors, market strategies, and negotiations between firms.
Are there limitations to what game theory can predict?
Yes, while game theory is powerful, it assumes rational behavior and may not account for emotions or irrational decisions.
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