{"id":204,"date":"2026-05-04T11:05:39","date_gmt":"2026-05-04T15:05:39","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=204"},"modified":"2026-05-04T11:05:39","modified_gmt":"2026-05-04T15:05:39","slug":"game-theory-in-everyday-decisions-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2026\/05\/04\/game-theory-in-everyday-decisions-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Game Theory in Everyday Decisions\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><span data-contrast=\"auto\">A while back,\u00a0we spoke to one of our\u00a0most\u00a0successful economics alums who is now a lawyer. We asked him, \u201cWhich topic that you learned as an economics major is most useful to you?\u201d\u00a0 He mentioned game theory because it\u00a0helped him\u00a0to\u00a0interact\u00a0more\u00a0productively\u00a0with others.<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Game theory\u00a0models\u00a0human interaction as\u00a0a\u00a0game. It\u00a0identifies\u00a0the\u00a0players, their options, the incentives they face, and the\u00a0likely outcomes\u00a0of their interactions. Different players, options, and incentives create different games.\u00a0<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The\u00a0<\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Prisoner's_dilemma\"><span data-contrast=\"none\">prisoner&#8217;s dilemma<\/span><\/a><span data-contrast=\"auto\">\u00a0is a well-known\u00a0game\u00a0of\u00a0conflict and cooperation.\u00a0The name\u00a0comes from the common police practice\u00a0of\u00a0interrogating\u00a0two prisoners suspected\u00a0of\u00a0a jointly committed crime\u00a0in separate rooms. If both say nothing,\u00a0their penalty will be light. However, both are\u00a0offered\u00a0amnesty\u00a0if they implicate the other\u00a0prisoner\u00a0and\u00a0an\u00a0extremely harsh penalty if they do not. Both then have a strong incentive to\u00a0talk. If both\u00a0talk,\u00a0this usually provides\u00a0more than enough evidence to\u00a0impose a harsher penalty than if neither had spoken.<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">A similar incentive structure\u00a0emerges\u00a0when two firms collude to monopolize a market. Both\u00a0firms\u00a0are\u00a0more profitable if they both\u00a0agree to reduce output to support a higher\u00a0market\u00a0price. But each\u00a0is\u00a0even more profitable if the other party reduces output and their firm cheats.\u00a0<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Prisoner\u2019s dilemma games apply to price wars, resource\u00a0hoarding, political gridlock, and environmental overuse.\u00a0Ways of overcoming the dilemma\u00a0include\u00a0social\u00a0mores\u00a0against defection, explicit contractual arrangements,\u00a0or forceful legal interventions.\u00a0<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In\u00a0<\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Coordination_game\"><span data-contrast=\"none\">coordination games<\/span><\/a><span data-contrast=\"auto\">, people\u00a0benefit\u00a0from cooperating and choosing the same result. For example, we benefit when we agree on which side of the road to drive on,\u00a0or\u00a0on technology standards\u00a0such as using the same electrical outlet standards\u00a0across a country. Social norms, such as\u00a0waiting\u00a0your turn in line, are also examples. Typical solutions to coordination games include clear communication\u00a0and focal points, such as standard rules, protocols, and shared deadlines.\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In a\u00a0<\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Sequential_game\"><span data-contrast=\"none\">sequential-move game<\/span><\/a><span data-contrast=\"auto\">, one player chooses their action before the others,\u00a0such as\u00a0tic-tac-toe,\u00a0checkers,\u00a0or\u00a0chess.\u00a0Many negotiations are sequential-move games in which one side goes first, and the others respond. In\u00a0<\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Simultaneous_game\"><span data-contrast=\"none\">simultaneous-move games<\/span><\/a><span data-contrast=\"auto\">, all players choose their actions at the same time.\u00a0For example, in rock-paper-scissors\u00a0and sealed-bid auctions, players simultaneously choose.\u00a0<\/span><span data-ccp-props=\"{&quot;335559731&quot;:720}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Understanding the game one is playing\u00a0and familiarity with its likely outcomes and pitfalls help\u00a0one\u00a0discover\u00a0strategies\u00a0that\u00a0work\u00a0best\u00a0in interactions with others.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A while back,\u00a0we spoke to one of our\u00a0most\u00a0successful economics alums who is now a lawyer. We asked him, \u201cWhich topic that you learned as an economics major is most useful to you?\u201d\u00a0 He mentioned game theory because it\u00a0helped him\u00a0to\u00a0interact\u00a0more\u00a0productively\u00a0with others.\u00a0 Game theory\u00a0models\u00a0human interaction as\u00a0a\u00a0game. It\u00a0identifies\u00a0the\u00a0players, their options, the incentives they face, and the\u00a0likely outcomes\u00a0of their [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[462],"tags":[1344,303,974,1768,359,1765,272,1769,1766,1767],"class_list":["post-204","post","type-post","status-publish","format-standard","hentry","category-microeconomics","tag-behavioral-economics","tag-competition","tag-cooperation","tag-coordination-games","tag-decision-making","tag-game-theory","tag-incentives","tag-negotiation","tag-prisoners-dilemma","tag-strategic-interaction"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Game Theory in Everyday Decisions\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2026\/05\/04\/game-theory-in-everyday-decisions-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Game Theory in Everyday Decisions\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"A while back,\u00a0we spoke to one of our\u00a0most\u00a0successful economics alums who is now a lawyer. 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