tailieunhanh - An Outline of the history of economic thought - Chapter 11

11 At the Margins of Orthodoxy . Games, Evolution and Growth . Game theory Game theory was formulated as a logical instrument for investigating situations in which the results of the choices of some agents are at least partially determined by the choices of other agents with conflicting interests. | 11 At the Margins of Orthodoxy . Games Evolution and Growth . Game theory Game theory was formulated as a logical instrument for investigating situations in which the results of the choices of some agents are at least partially determined by the choices of other agents with conflicting interests. This theory has been relevant above all in tackling the problems posed by situations of conflict and co-operation between rational and intelligent decision-makers. Rational means that each agent makes his own choices with the aim of maximizing his subjective expected utility whenever the decisions of the other agents are specified. Intelligent means that each agent is in a position to know everything about the structure of the situations in which he finds himself just like the theorist who studies them. In particular each decision-maker knows that the other decision-makers are intelligent and rational. The definitive link between game theory and economic theory was only established in 1944 with the publication of The Theory of Games and Economic Behaviour by von Neumann and Morgenstern. A series of new notions and research directions originated from the union of the two approaches which are still alive today the notion of co-operative games in which players are able to make agreements and threats which are rationally fulfilled the analysis of coalitions which has resumed the pioneering studies of Edgeworth and has led to modern core analysis the axiomatic definition of expected utility and the demonstration of its importance as a criterion of choice in uncertainty conditions and the application of the formalism of game theory to a wide series of economic problems. Some circumstances however such as the novelty of the concepts and of their mathematical demonstrations initially limited the diffusion of game theory especially in the field of the social sciences to which it was mainly directed. It was not until the end of the 1950s with the publication of Games and .