Games
Game theory is the study of strategic decision-making, situations where the outcome of your choice depends not only on what you do, but also on what others do. Instead of looking at decisions in isolation, game theory analyzes interaction.
A game in game theory has four basic elements:
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Players – who is making the decisions
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Strategies – the choices available to each player
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Payoffs – the outcomes or rewards from different choices
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Rules/Information – what players know and when they know it
The Prisoner's Dilemma
You have just robbed a bank. You and your partner cracked the safe, stuffed the cash into bags, jumped into your getaway car, and sped off into the night. For a moment, it feels like you’ve won. Then the sirens begin.
The jig is up.
You and your accomplice are arrested and taken to separate interrogation rooms. You can’t see each other. You can’t communicate. All you can do now is decide.
Battle of the Sexes
It’s Friday evening. You and your partner finally have time to spend together. The problem?
You’ve been waiting all week to watch a championship football match. Your partner is excited about the opening night of a classical music concert.
Going alone defeats the purpose — the whole point is spending time together. Neither of you wants to give up your own preference entirely.
There’s no communication right now. You’re both making the decision independently.
The Chicken Game
Two cars idle at opposite ends of a long, narrow road—just wide enough for one vehicle to pass. A small crowd has gathered, phones out, waiting. It’s a test of nerve.
Both drivers understand the unspoken rules. If one swerves and the other keeps going, the one who swerves loses face. They’ll be mocked, labeled a coward. If both swerve, the crowd disperses, disappointed—no winner, no loser. And if neither swerves, there will be a crash that injures or kills both drivers.
Guess 2/3rds of the Average
You’re in a room with a hundred strangers. Each of you is asked to write down a number between 0 and 100. No discussion. No coordination.
The rule is simple: the winner is the person whose number is closest to two‑thirds of the average of all chosen numbers.
At first, this sounds harmless—almost playful. Then you realize something disturbing: your payoff depends entirely on what everyone else believes everyone else will do.
The Ultimatum Game
You and a stranger are brought into a room. On the table between you lies a sealed envelope containing ₹1,000.
You will decide how to split the money. You can offer any amount you like—₹500, ₹100, or even 0. The other person will decide whether to accept or reject the offer.
If they accept, the money is split as proposed. If they reject, neither of you gets anything.
As your hand hovers over the form, a question creeps in: How low can I go?
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Traveler's Dilemma
Two travelers return, only to discover that their identical suitcases have been damaged.
Each of you must privately write down a value between ₹2,000 and ₹10,000—the amount you claim your suitcase was worth.
If you both write the same number, you each receive that amount. If you write different numbers, the person who wrote the lower number receives that amount plus a ₹500 bonus. The person who wrote the higher number receives that amount minus ₹500.
You stare at the form. Trust is fragile.
Matching Pennies
Two players sit across from each other, each holding a coin. You will secretly choose whether to place your coin Heads or Tails.
The rules are simple:
If the coins match, Player A wins.
If the coins differ, Player B wins.
No talking. No repetition. Just one move.
You lock eyes with your opponent and think: What will they expect me to do?
The Signalling Game
You are a job applicant. Employers cannot observe your true ability—only what you choose to show them.
You can acquire a prestigious degree. It is expensive, exhausting, and time-consuming. For high-ability candidates, it is manageable. For low-ability candidates, it is painful.
Employers know this. They also know some applicants are high ability, some are low ability, and everyone wants the highest-paying job
Your decision is not about learning. It’s about being believed.