In Managerial Economics, the authors discuss two different types of games: sequential-move games and simultaneous-move games. Sequential-move games mean ”players take turns, and each player observes what his or her rival did before having to move” (p.186). You are essentially making moves and decisions based off the other player. Sometimes you are able to predict the outcome by looking ahead to possible moves the other player may make. This is very similar to the strategy used in chess or checkers. “In simultaneous-move games each player decides on her strategy before knowing the decisions of other players” (Froeb, McCann, Shor, & Ward, 2016). This strategy is a little more difficult than sequential-move game, but is still doable. The easiest analogy I can think of is the game of rock, paper, scissors. You have to decide what you are going to play without knowing what your opponent is going to play. 

An instance in my life in which I use game theory would have to be when I am driving in traffic. Traffic is horrible in Houston and no matter what time of day you can guarantee that you will be sitting in traffic for a while. Of course, all the other drivers are players in this game with the objective being getting from point A to point B in a reasonable amount of time. I can see how driving in traffic could be either sequential-move game or simultaneous-move game. If drivers used their blinkers like they are supposed to then you can figure out which lane you want to stay in or move to. However, we all know that not all drivers use their blinkers, so sometimes you have to just be on the lookout for other players before making a lane change or staying in a lane and just going faster. Of course I drive a lifted 4x4 V8 truck so I use a lot of gas, especially driving in the city and sitting in traffic. I have to be able to get to where I am going in a fast time so that I am not stuck in too much traffic burning up all my fuel. The more fuel I use the more money that is going to have to come out of my pocket when it is time to refuel. Luckily I invested in an EZ tag which allows me to take an alternative route that is not as crowded and cuts my drive time in half and also saves me fuel. Overall, this saves me money not only on gas, but also on money I will have to spend on any future repairs I may have to make from normal wear and tear. I did not know that I was implementing game theory. Now when I drive anywhere I will know that I am playing a game of theory.

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Its interesting to see how game theory concepts can be applied to reallife situations such as your e... View the full answer