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The Value Perspective

CHAPTER

How to Apply Game Theory Concepts to the World of Investing

Game Theory can be useful to help improve our decision-making and deal better with uncertainty. If you have a situation where your payoff does not depend exclusively on your strategy, but it depends on the strategies that other players, other people choose to adopt, then game theory applies in those situations. Nobody operates in a vacuum. Investors are concerned about businesses. Businesses operate in markets. Markets have multiple players and so on. The profit that a business earns is not completely within its control. So all the concepts that we talked about, game theory and probabilistic thinking and so on, they generally apply to decision making. We know that you've got loads of tools which you've put on your

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