By Janet Chen, Su-I Lu, and Dan Vekhter

Game theory is concerned with the decision-making process in situations where outcomes depend upon choices made by one or more players. The word "game" is not used in the conventional sense but describes any situation involving positive or negative outcomes determined by the players' choices and, in some cases, chance. In order for game theory to apply, certain assumptions must be made. The first is that each player is rational, acting in his self-interest. In addition, the players' choices determine the outcome of the game, but each player has only partial control of the outcome.

The following topics will be addressed:

The authors would like to thank Professor Eric Roberts, Sophomore Assistants Jed Burgess and Caroline Carter, and the Sophomore College program of Stanford University.