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BASIC CONCEPTS OF GAME THEORY AND TYPES OF
EQUILIBRIUM
Usmonov Murodbek Dusmurot ugli,
SIES, Assistant Professor-Trainee of the Department of "Digital
Economy"
Baxtiyorova Rukhshona Ikramovna,
Student of Samarkand institute of economics and service
https://doi.org/10.5281/zenodo.14363592
ARTICLE INFO
ABSTRACT
Qabul qilindi: 29-noyabr 2024 yil
Ma’qullandi: 8-dekabr 2024 yil
Nashr qilindi: 10-dekabr 2024 yil
This article explores the role of game theory in
economics, focusing on its application to strategic
decision-making, competition, and resource
allocation. Game theory, particularly in the context
of non-cooperative and cooperative games, offers
critical insights into the interactions between
individuals and organizations in various economic
settings. The theory's evolution, from von Neumann
and Morgenstern's foundational work to John
Nash's equilibrium concept, has significantly
advanced the understanding of economic behavior.
institutional economy, game theory,
Nash
equilibrium,
Stackelberg
equilibrium, Pareto equilibrium.
It is known that game theory plays an important role in economics, as it helps to analyze
competition, strategy, and decision-making processes. Game theory mainly studies strategic
interactions between one or more players (individuals or organizations). This theory is used
in solving economic problems, as well as in various fields, such as marketing, politics, and
ecology.
The science of game theory and process research is concerned with the creation and
implementation of methods for more effective functioning of management organizational
systems. The subject of this science is a system of management of several interconnected units.
At all stages of the development of society, efforts are made to conduct business on the basis
of a well-structured plan. This is especially important in the current conditions when market
relations are being restored. In order to determine the direction of effective economic
development, it is necessary to master the methods of quantitative modeling of processes.
This is necessary for the development of short-term and strategic plans within the national
economy, taking into account large-scale and long-term events, and identifying various
options for economic development. Also, for creating a program for regional development,
providing coordinated plans for research and development, for performing some complex
work in targeted program planning, for allocating resources, and for ensuring the rational
functioning of the enterprise in the external market environment. In many cases, the science
of process research, which is a direction of applied mathematics that has been developing
rapidly and effectively in recent times, can serve as a basis for studying organizational issues.
Institutional economics uses game theory, based on the ideas in John von Neumann and Oscar
Morgenstern's book "Game Theory and Economic Behavior" (1944), to build formal models
[47]. The development of this theory is associated with the concept of equilibrium, introduced
by John Nash in 1950. This developed a method for solving non-cooperative (non-coalition)
games. By 1994, three researchers were awarded the Nobel Prize in Economics for the first
analysis of equilibrium in the theory of "non-cooperative games". These were: Reinhard Selten
129
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(Germany), Jozef Nash (USA), John S. Harsany (Hungarian origin - USA). Among the main
features of this research method, the following should be distinguished: First, game theory
deals with the analysis of situations in which individuals act in concert: the solution of each
condition affects the outcome of their interaction and, in turn, the decisions of other
individuals. When solving the problem of their actions, an individual must put themselves in
the place of the counterparties. To build formal models of institutional economics, game
theory is used, based on the ideas in the book "Game Theory and Economic Behavior" (1944)
by John von Neumann and Oscar Morgenstern [47]. The development of this theory is
associated with the concept of equilibrium situations introduced by John Nash in 1950. This
led to the development of a method for solving non-cooperative games. By 1994, three
researchers were awarded the Nobel Prize in Economics for the first analysis of equilibrium in
the theory of "non-cooperative games". These are: Reinhard Selten (Germany), Jog Nash (USA),
John S. Harsany (Hungarian origin - USA). Among the main features of this research method,
the following should be distinguished. First, game theory deals with the analysis of situations
of mutually conditioned actions of individuals: the solution of each condition affects the
outcome of interaction and, in turn, the decisions of other individuals. When solving the
problem of his actions, the individual must put himself in the place of the counterparties.
Cooperative (coalition) games are situations in which information exchange and alliance
formation are possible between participants. In non-cooperative (non-coalition) games, a
single participant is the starting point for analysis, in which information exchange and alliance
formation between participants are not possible. Games are mainly represented in the form of
a matrix. In non-cooperative (non-coalition) games, participants interact in a conflicting
manner. Each participant seeks to increase his own gain. The gain of one leads to the defeat of
the other. The action plan of each participant in the game to resolve conflict situations is
called the strategy of the game participant.
For each interaction, there may be different types of equilibria: dominant strategy equilibrium,
Nash equilibrium, Stackelberg equilibrium, and Pareto equilibrium.
A dominant strategy equilibrium is a plan of action that provides the participant with the
highest utility regardless of the actions of the other participant.
Nash equilibrium is a situation in which none of the players can unilaterally increase their
payoff by changing their plan of action.
Stackelberg equilibrium is a situation in which none of the players can unilaterally increase
their payoff. In this case, the decision is first made by the first player, and then it becomes
known to the second player.
Pareto equilibrium is a situation in which the state of one of the players cannot be improved
without worsening the state of the second player.
In conclusion, in the study of game theory and processes, optimal solutions to many current
problems, including those in the field of economics, are solved using the minmax method.
Methods and algorithms for obtaining maximum profit are developed, in which the number of
products delivered to consumers and the profit are systematically planned.
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