Introduction to Game Theory in Economics: Understanding Strategic Interactions and Rational Decision Making

The video introduces game theory, explaining its importance in economics and strategic decision-making. It uses chess as an example to illustrate strategic thinking and discusses the application of game theory in various fields like sports, business, and politics. The video highlights the role of game theory in understanding economic interactions among agents such as consumers, firms, and governments. It provides examples like price cartels, trade wars, and bank runs to demonstrate game theory's practical applications. Finally, it outlines the basic elements of a game, including players, rules, outcomes, and assumptions, emphasizing rationality and common knowledge.

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