Game theory is the study of interactive decision-making in which the outcome for each participant or "player" is determined by the actions of all. If you are a player in such a game, your course of action or "strategy" must take into account the choices of others. But, in thinking about their choices, you must recognize that they are thinking about yours, and that they are trying to take into account your thinking about their thinking, and so on.

Here is an example of my game theory from my past experience:

My friend and I decided to go on a trip. We decided to share a hotel room for the duration of our trip and split the bill. The room is $150 per night, and we are staying for three nights, so the total will be $450, excluding taxes and other fees. We also decided to book ahead of time, and there were no cancellation fees. If we were to cancel our trip, we both lose our money.

1. -Travel together: pay $225 each
2. -Travel alone: pay $450
3. -Don't travel: lose $225 each

EXPLAIN