The use of game theory’s mathematical models—which analyze strategic interactions between rational decision-makers—to solve real-world problems in economics, business, politics, and biology. It moves beyond the textbook “Prisoner’s Dilemma” to design auctions, negotiate treaties, price products, or even schedule airport security checks. Practitioners don’t just predict what players will do; they design the rules of the “game” itself to incentivize better outcomes, like creating a market that naturally reduces pollution or a contract that aligns an employee’s interests with the company’s.
Example: “The city used applied game theory to fix traffic. Instead of just adding lights, they made each traffic signal an ‘agent’ in a game, rewarded for keeping cars moving on its road but penalized for creating gridlock on intersecting streets. The signals started cooperating, learning to form ‘green waves.’ They didn’t just react to traffic; they played a city-sized game of optimization and won.”
by Abzunammu February 2, 2026
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