IMPLICATION OF GAME THEORY TO INTERNATIONAL TRADE
IMPLICATION OF GAME THEORY TO INTERNATIONAL TRADE

Summary/Abstract: Game Theory is a general mathematical analysis to investigate the strategic interactions among players. Game theorists attempt to provide precise descriptions of situations of conflicting interests in order to study the behavior that such a conflict would (or, in some cases, should) elicit from rational agents. Players are assumed to consider the position and perceptions of other players while forming their strategies. In our examples, we will assume that there are two players, and that each has two choices and the fact that the players are selfish (operate in their own best interests) and rational (choose the best options available). First, I outline some basic concepts of game theory and, in the next section, I give some examples regarding the application of game theory to international trade (cartel, free trade & protection and trade policies).

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