Chapter 4: Game theory and collective goods
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Game theory is a general, analytical theory of rational choice in strategic interactions. While it was focused on the analysis of games in the literal sense in its very beginnings, game theory has since advanced to being an indispensable theoretical tool for economics and many other social sciences. This introduction intends to explain the basic terms and concepts of this complex and efficient theory. It will be confined to classic game theory, which analyzes strategic interactions of individual actors based on the assumptions of rationality and self-interest (homo economicus), and leave out behavioral and evolutionary game theory. To keep the barriers for jurists low, the mathematical formalism, which is constitutive for game theory, will be kept to a minimum and not formally introduced, but verbally explained.