ECONOMIC APPLICATIONS OF THE THEORY OF GAMES
The object of study of the Theory of Games are games. A game is a process in which two or more people make decisions and actions, the structure of which is registered in a set of rules (which may be formal or informal), at the end of profit. Each combination of decisions and actions determines a particular situation, and given that the decisions and actions of the players involved can be combined in numerous ways, generated numerous situations will also be equal to the magnitude of the combinations of decisions and actions agents. The total set of possible situations will be called Situational Game Table.
Following the above reasoning, we find that each situation ( each point of the situational picture) generates a combination of certain awards. The prize gives a player a particular situation can be compared to the prizes offered other situations.
A golden rule of game analysis is as follows: "Every player can seek your highest good." Thus, when we study the behavior of a player, we know that it must qualify every situation and always pursue the particular situations that offer the greatest good.
An important concept is that of payment. As noted above, each situation offers a combination of prizes, as follows: If you are two players, the situation offers a prize for the first and one for the second. If there are three players, the situation generates a prize for each player. This is the logic of the awards and situations. Each prize is called payment.
Another key concept is that of the utility function. The utility function makes welfare payments. For example, if a payment of five units of money was achieved, it could generate a welfare payment of five units of welfare, and we are talking about an identity function. If the utility function were a square root, paying only five units correspond to five units being being. In this paper we will mainly utility functions identity. When required trying different utility functions (such as the square root).
IMPORTANCE OF GAME THEORY