Strategy Is Everything

Game theory is the math of strategic decisions — choices where your best move depends on what other people choose. It was built by mathematicians John von Neumann and John Nash, and it now turns up in business deals, elections, animal behavior, and the small bargains of everyday life.

Here is the catch that makes these problems hard: you cannot pick the best move on your own. Your payoff hinges on a choice someone else is making at the same time — and they are reasoning about you. Drivers leaving work all want the fastest route, yet each one's fastest route depends on where everyone else drives. Strategy means thinking one step into the other person's head.