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Game Theory for Risk Professionals - From Theory to Practice
Game theory provides a framework for analysing strategic decision-making under uncertainty, making it a valuable concept for risk professionals. John von Neumann, along with Oskar Morgenstern, introduced foundational concepts in their book Theory of Games and Economic Behavior, establishing game theory’s central role in economic and strategic analysis. The minimax theorem, developed by von Neumann, became a cornerstone of game theory, defining optimal strategies in competitive scenarios. Game theory models how competitors anticipate each other’s moves, offering tools to analyse strategic interactions — a crucial skill for managing risk in competitive or adversarial environments such as cybersecurity, financial markets, and supply chain management. ...