Thanks to the sterling efforts of Sylvia Nasar, Ron Howard, and Russell Crowe, many people are aware that John Nash, the Princeton mathematician who was killed over the weekend in a car crash on the New Jersey Turnpike, lived a remarkable life. It included early academic stardom, decades of struggling with schizophrenia, and, in 1994, a shared Nobel Memorial Prize in Economic Sciences. But outside the field of economics, Nash’s contribution to game theory, for which he was awarded the Nobel, remains rather less well understood.
Although it is often used in economics, game theory can be applied to any venue where people, or other decision makers, interact strategically and follow rules-based behavior. The setting could be nuclear negotiations, such as the ones currently taking place between Iran and the great powers. It could be a product market, in which a number of firms compete for business. Or it could be a political campaign, in which various candidates try to outdo each other. The word “strategically” is important, because the various players, in choosing from a variety of possible moves, take account of one another’s actions, or likely actions. And the phrase “rules-based” means that the players are acting purposefully and seeking to maximize their own advantages, rather than behaving passively, or randomly.
