The Application and Limitations of Game Theory in Economics

Yuktsun Lin

doi:10.54254/2754-1169/2025.19662

Research Article

Open access

Published on 3 January 2025

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Lin,Y. (2025). The Application and Limitations of Game Theory in Economics. Advances in Economics, Management and Political Sciences,133,168-173.

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The Application and Limitations of Game Theory in Economics

Yuktsun Lin *^,1,

¹ Xiamen University Affiliated Keji High School, Xiamen, 361008, China

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/2025.19662

Abstract

This article aims to understand the impact, application, and limitations of game theory on microeconomics and macroeconomics in economics. Game theory outlines the situation where players make rational decisions in order to surpass their opponents. Game theory plays a crucial role in the buying and selling parties in different markets. This article provides an overview of the concept of game theory, not only explaining its applications in market analysis, resource allocation, price auctions, and cooperative behavior in economics, but also analyzing the limitations of game theory in its application. By reviewing these cases, this study not only demonstrates how game theory plays a role in economic games such as market competition, international trade, and finance, but also demonstrates how to apply game theory reasonably. The significance of this study includes further discussion on the specific applications of game theory and the limitations of its application in economics, to help people maximize their benefits.

Keywords

Game theory, Nash equilibrium, market analysis

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References

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Cite this article

Lin,Y. (2025). The Application and Limitations of Game Theory in Economics. Advances in Economics, Management and Political Sciences,133,168-173.

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About volume

Volume title: Proceedings of the 4th International Conference on Business and Policy Studies

Conference website: https://2025.confbps.org/

ISBN：978-1-83558-807-9(Print) / 978-1-83558-808-6(Online)

Conference date: 20 February 2025

Editor：Canh Thien Dang

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.133

ISSN：2754-1169(Print) / 2754-1177(Online)

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