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Game Theory Blockchain Mechanisms Explained

Written By Ivan on Tech

May 15, 2020

Game theory blockchain applications can help you understand how decentralized cryptoeconomic systems work without falling victim to internal disintegration and cheating. Game theory is a study of mathematical models of strategic interaction and decision-making between rational decision-makers. 

While game theory can be both cooperative and non-cooperative, we will be looking exclusively into the latter since a decentralized, cryptoeconomic environment is, by design, a trustless and non-cooperative one.

Your typical game theory model has three components:

  • Players: The ones who make all the decisions. Eg. A company’s board of directors.
  • Strategies: The decisions that the company will make to further its agenda.
  • Payoff: Outcome of the strategies that have been made by the players.

First devised by John von Neumann and Osker Morgenstern in 1944, game theory was a significant breakthrough in the study of oligopoly markets. 

What is Oligopoly?

Market structure is the...

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