Introduction to Game Theory
While game theory is a powerful tool for analyzing decision-making in strategic situations, it is not without its limitations. One major limitation is the assumption of rationality. Game theory assumes that all players are rational and will always make the best decisions for themselves. However, in reality, people may not always behave rationally. For example, they may make decisions based on emotions or biases, rather than pure logic.
Another limitation of game theory is the assumption of perfect information. Game theory assumes that all players have perfect information about the game and the other players. However, in reality, players may not have complete information or may not be able to accurately predict the actions of others.
A third limitation of game theory is the assumption of static games. Game theory assumes that games are played once and the outcome is determined. However, in reality, many games are played repeatedly over time, and the outcome of one game may affect the outcome of future games.
Finally, game theory assumes that all players have the same goals and preferences. In reality, players may have different goals and preferences, which can complicate decision-making and make it more difficult to reach a Nash equilibrium.
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