Game Theory: The Science of Decision-Making

The video introduces game theory, a mathematical framework for analyzing social interactions. It covers both competitive and cooperative game theory, explaining key concepts like the Prisoner's Dilemma and Nash equilibrium. The video also delves into the Shapley value, a method for fairly dividing resources in cooperative games, using examples to illustrate its application.

What is the primary focus of game theory?

• Mathematical puzzles

• Social interactions and decision-making

• Video game strategies

• Traditional board games

In the Prisoner's Dilemma, what is the best strategy according to game theory?

• One prisoner confesses, the other remains silent

• Both prisoners confess

• Both prisoners escape

• Both prisoners remain silent

What is Nash equilibrium?

• A state where players cooperate fully

• A method for dividing resources

• A situation where each player's decision is optimal, given the others' decisions

• A strategy that guarantees a win

What is the main goal of cooperative game theory?

• To maximize individual gains

• To eliminate all competition

• To create competitive environments

• To ensure fair distribution of resources

What does the Shapley value aim to determine?

• The fastest way to win a game

• The most efficient strategy for competition

• The fair contribution and benefit for each player in a coalition

• The best way to avoid losses

In the cookie-baking example, how is the Shapley value calculated?

• By giving all credit to the fastest baker

• By considering each player's marginal contribution

• By dividing the total cookies equally

• By random selection

What is a key takeaway from game theory in competitive situations?

• Focus on long-term friendships

• Avoid making any decisions

• Always cooperate with others

• Choose actions that benefit you the most, regardless of others