Game theory is the formal study of how rational actors interact to pursue incentives. It investigates situations of conflict and cooperation.

See also: Coalition/coordination, Coalitional Instincts, Decision theory, Moloch, Utility functions, Decision Theory, Prisoner's Dilemma

Game theory is an extremely powerful and robust tool in analyzing much more complex situations, such as: mergers and acquisitions, political economy, voting systems, war bargaining and biological evolution. Eight game-theorists have won the Nobel Prize in Economic Sciences.

References

Naïve introduction to Game Theory

Stanford Encyclopedia entry on Game Theory