Game theory and its application

The establishment of Nash’s theory called Game Theory plays an important role in modern society. Game theory was applied in different aspects, ranging from business to art. This theory really makes a great contribution to the human-beings. It becomes the foundation of the modern prevailing Game Theory and economic theories, and it also has some real world relevance. And what really is Game Theory, and when we can use this theory. In general, it is a game that can bring payoffs to different participants and it can apply in all areas of our life.

The definition of Game Theory is the study of the decisions made by different participants according to a certain discipline. It sometimes could be seen as a lever, needed to keep balance. And what are the ingredients of a game? That means we need to figure out what can form a game. The first ingredient is players, and the second ingredient is strategies. And we all need to use some notations that mean some certain symbols to represent. We can use some certain symbols to represent it. And according to the strategies every participant adopt, we can call them strategy choices. And we can see all these strategies “a strategy profile.” And at last we also need payoffs to complete the game. Also, we need to choose some notations to represent payoffs.

Game Theory can be applied in different areas to study a variety of human and animal behavior. We can analyze some social science in political, sociological and psychological behaviors. And it is a major method, using in economics and business to find out a better theory or make some more beneficial choice. Here I want to emphasize the Nash theory applied in how to put yourself in others’ shoes to try to and figure out what they are going to do. It doesn’t just matter what your payoffs are, but also important that what other people’s payoffs are. And this theory also can be applied in other aspects of our life. For example, two firms want to compete with each other in prices, but no matter how low the price is offered by one part, the other part also wants to undercut it. This may cause both of them to get down to the marginal cost and will also affect the profits of the whole industry. No matter how good one product is, the price is expected to be lower and lower. We can clearly see that from an example, we have two players to participate in this Game, and we call them player 1 and player 2. We can imagine that an invader is deciding to invade a country, and there are two ways to pass into the invaded country. Being as a defender of this country, you need to guess which road they may choose, and you have to lay out the defending line. The question is that you have to choose between the two routes. This is an example of successfully applying the Game Theory in the military war.

All in all, the meaning of the Game Theory is like playing a game, and it includes participants and strategies using in that game. It describes and analyzes the behavior of human beings and to give suggestions on how to have a better choice. The application of this theory can bring a lot of benefits to our life, from sociological, political areas to economics. In our daily life, we can also use the Game Theory, and it becomes the part of our life. If we don’t have this theory, many things in our life may change.

Stock investment project

When we want to invest in stocks, it is hard to decide what the strategy is. Because it was affected by many different factors. I am going to invest $100000 in stocks.

The price of a stock changes in response to the alteration of the whole world market. The price of the stock may change day by day. We know that the daily startup said that Bee raises$4.6 million to deliver banking services. That means Bee can invest more money in developing banking service sector. We can know that Bee certainly gets profits from its firm, and it can have the money to invest in other sectors. So, we need to invest more money in Bee firm related stocks. And I would like to invest$50000.

Alibaba seeks to sell a stake in Chinese technology startup. So, it can easily infer that Alibaba started to sell stocks in Chinese technology startup. Because Alibaba is specialized in dealing with some foreign countries. Besides, the company recently earns a great amount of money due to the 11.11 big sale day. So I will invest $50000 in that stock. The new information shows that Groupon’s stock could take ‘several quarters’ to rebound. From that information, we can clearly know that Groupon Company is encountered with some problems, and it is not the right time to buy stocks of that firm. I will not buy stocks of that firm and after several quarters, when they get back to become in an upward trend, I will buy it again. We can see another information says that Groupon has a plummet after its earnings. It also tells us that we need to push back of the investment in this company.

So, from above I have shown my ideas clearly that I will invest $50000 in Bee Company and another$50000 in Alibaba. These two companies are all playing very well in the world market. There are many stock portfolio you can choose, but according to the different situations. Sometimes, they can go gradually, but sometimes they go an opposite way. No matter what kind of portfolio you may choose, getting profits and to keep the risks in the lowest is the best choice.

In reality, all people want to get as much profit as possible, but on the contrary, the profits and risks always have a close link. For the long-term consideration, it is better to invest in a reasonable way. Before investing in a stock, you need to prepare to pay attention to its recent going trend. Having a good inner peace is also extremely important. All of these factors can contribute to getting a great profit. And having a strong speculation also plays an important role in getting profit. Speculation means to make accurate predictions of the interest rate of the recently issued stocks.

As we all known, the face value changes all the time through their issuing to another issuing. In order to raise long-term profits, as I have discussed before, a corporation can issue stocks to raise funds from the public, so that we could have the chance of getting profits or losing money from the investing. In the US, millions of people buy stocks being as an investing way. Here, in China, the number of stock and stockholders is on the rise. Some of them are called to be speculators---they are those who want to get quick gains. However, some investors invest for a long-term return, and also some people they want to be the combination of the two people and they are the rational investors.