Following are the key terms related to Game theory.
Each participant (interested party) is called a player.
The strategy of a player is the predetermined rule by which a player decides his course of action from the list of courses of action during the game. A strategy may be of two types:
"STRATEGY is; A style of thinking, a conscious and deliberate process, an intensive implementation system, the science of insuring FUTURE SUCCESS." -Pete Johnson
The course of action which maximizes the profit of a player or minimizes his loss is called an optimal strategy.
A saddle point is an element of the matrix that is both the smallest element in its row and the largest element in its column. Furthermore, saddle point is also regarded as an equilibrium point in the theory of games.
The outcome of playing the game is called pay-off.
It is a table showing the outcomes or payoffs of different strategies of the game.
It refers to the expected outcome per play, when players follow their optimal strategy. It is generally denoted by V.
In the subsequent sections of this chapter, we provide several trivial illustrations. It should be noted that we make no pretense about the realism of these illustrations.