Glossary
Every game theory term used on DecisionPlay, explained in plain English: Nash equilibrium, dominant strategy, Prisoner's Dilemma, and more. No background assumed.
These are the same definitions that appear when you hover a term anywhere on the site. For the full picture instead of a term at a time, start with Game Theory 101 or read how the analysis engine works.
Every term
- Bargaining Game
- Two people split something of value between them, and who gets more depends on how easily each one can walk away.
- Battle of the Sexes
- Two people want to spend time together but disagree on what to do, and both prefer being together over doing their own favorite thing alone.
- Chicken
- Two sides head toward a clash, and whoever backs down first avoids disaster but looks weak. If neither backs down, both lose big.
- Cooperate
- To choose the mutually beneficial option, trusting the other side to do the same.
- Coordination Game
- Everyone wants to make the same choice as everyone else, like which side of the road to drive on. The challenge is just agreeing.
- Defect
- To choose the selfish option, even when cooperation would benefit everyone.
- Dominant Strategy
- A move that's best for you no matter what the other player chooses.
- Equilibrium
- A stable outcome where no one has reason to change their move.
- Mixed-Strategy Equilibrium
- A stable outcome reached by randomizing between choices, rather than picking one move every time.
- Nash Equilibrium
- The point where no player improves by changing strategy alone: a stable standoff.
- Pareto Optimality
- An outcome where helping one person would mean hurting another, so nothing is being left on the table.
- Payoff Matrix
- A grid showing what each player gains or loses for every combination of choices.
- Principal-Agent
- One person hires or trusts another to act on their behalf, but can't fully see what that person actually does.
- Prisoner's Dilemma
- Two people would each do better by cooperating, but each is tempted to act selfishly, so they both end up worse off.
- Public Goods Game
- Everyone benefits from a shared resource whether they help pay for it or not, so people are tempted to let others cover the cost.
- Repeated Game
- The same two people face the same choice again and again, so today's decision can shape how the other person treats them next time.
- Signaling
- Using costly actions to credibly communicate private information.
- Signaling Equilibrium
- A stable outcome where one side's costly actions reliably reveal something true about them, and the other side has learned to trust that signal.
- Signaling Game
- One person takes an action that costs them something, just to prove a claim about themselves is true.
- Stag Hunt
- Two people can team up for a big reward, or each play it safe alone for a smaller guaranteed one. Trust decides which happens.
- Subgame-Perfect Equilibrium
- A plan that stays the smart choice at every point along the way, not just at the start.
- Ultimatum Game
- One person offers a way to split something, and the other can only accept the split or reject it. Rejection leaves both sides with nothing.
- War of Attrition
- Two sides keep competing by holding out longer than the other, and whoever gives up first loses, even though waiting costs both of them.
- Zero-Sum
- One player wins exactly what the other loses, with no way for both to gain.