Researched
Game Theory
Von Neumann and Morgenstern (1944) and Nash (1950) describe decisions whose outcome depends on what others do.
Open in the interactive tree →The Nash equilibrium shows why rational actors can produce poor outcomes (prisoner's dilemma). Game theory explains auctions, deterrence, cartels and climate negotiations; mechanism design builds rules so that honesty pays. Several economics Nobel prizes followed (e.g. Nash 1994, Hurwicz/Maskin/Myerson 2007).
Prerequisites
- Probability Theory1654
- Economics1776
Unlocks
- Linear Optimization (Simplex)1947Von Neumann linked linear-programming duality to the minimax theorem of games
- Behavioral Economics1979
- Deep Blue Beats Kasparov1997Chess search rests on von Neumann's minimax theorem
- Global Coordinationopen