Game Theory:John NASH

When you do something, it includes strategic calculations to calculate how the other person will react.Bringing together social and economic accomplishments is similar to the chess game in which the players determine the strategy according to what the next move will be in another acting.Until the 1940s, the economic discipline had largely ignored this issue.Economists have assumed that every buyer and seller in the market is small compared to the total size of the market, so no one has the choice to pay for a product or salary paid for a product.According to this logic, individual choices have no effect on the others, and as a result they can be safely ignored.In 1838, however, French economist Antoine Augustin Cournot analyzed how much the two firms would produce based on the idea of ​​what the other company would do.But it was an individual case where these strategic interactions were analyzed.

                 In 1944, American mathematicians John von Neumann and Oskar Morgenstern published revolutionary works called "Theory of Games and Economic Behavior".These mathematicians claimed that many parts of the economic system were governed by a small group of participants, such as large corporations, trade associations or the government.In such a case economic behavior had to be explained on the basis of strategic interactions.They tried to establish general rules about the strategic behavior among people by analyzing simple games of two persons "zero sum" (one person wins and the others loses).It's called game theory.

                 Von Neumann and Morgenstern looked at cooperative games in which players had a number of possible actions, each with its own particular result, or payoff.Players were given the opportunity to assess the situation and agree on an action plan.The real example of such a game was presented by US mathematician Merill Flood,"who allowed his three teenagers to bid for the right for one of them to work a sa babysitter for a maximum payment of $4.They were allowed to discuss the problem and form a coalition, but if they were unable to agree between themselves then the lowest bidder would win. To Flood, there were easy solutions to the problem, such as settling by lot or splitting the proceeds equally. However, his children were unable to find a solution and eventually one of them bid 90 cents to do the work.

Nash Equilibrium

                 At the beginning of the 1950s, John Nash, an American mathematician, examined what happens when players make independent decisions in situations where there is no co-operation, no opportunities for communication or co-operation.It could have been a blissful outcome when collaboration thought that the co-operation of each player would maximize their chances of success.In such games, Nash found an equality situation in which two players did not want to change their behavior.The player chooses the best strategy, thinking that their opponents have chosen the best strategy.In such games, Nash found that no player wanted to change his behavior because "each player's strategy was optimal for the strategy of the next." This was referred to as the Nash equilibrium.

                 After World War II, game theory became very popular and was used especially by RAND (research and development).The task of RAND, founded in 1946 by the USD government, was to use knowledge for national strength.This institution has commissioned mathematicians, economists and other scientists to investigate areas such as game theory, which is thought to be linked to cold war policies in particular.Game theorists who worked in RAND in 1950 developed two examples of non-collaborative games.The first of these is designed to be called "So Long Sucker", which is also psychologically very annoying.This game forces the players to enter the coalition, but as a result you have to deceive your partner to win.According to the reports, the spouses who tried this game were usually returning in separate taxi cabins.

JOHN NASH

Born in 1928 into a middleclass American family, John Nash was labeled as backward at school due to his poor social skills. However, his parents recognized his outstanding academic ability. In 1948, he won a scholarship to Princeton University. His former tutor wrote a one-line letter of recommendation: “This man is a genius.” At Princeton Nash avoided lectures, preferring to develop ideas from scratch. It was there that he developed the ideas on game theory that were to earn him his Nobel Prize. In the 1950s he worked
at the RAND Corporation and MIT (Massachusetts Institute of Technology), but by now his mental state was worsening. In 1961, his wife committed him for treatment for his schizophrenia. Nash battled with the condition for the next 25 years but never stopped hoping that he would be able to add something else of value to the study of mathematics.