Game theory is a mathematical framework used to analyze the consequences of certain decision-making scenarios. It is a branch of applied mathematics that provides tools for analyzing situations in which parties, called players, make decisions that are interdependent. Game theory is the study of strategic, interactive decision making among rational individuals or organizations. The focus of game theory is the game, which serves as a model of an interactive situation among rational players. The key to game theory is that one players payoff is contingent on the strategy implemented by the other player. The games studied in game theory may range from chess to tennis and from child-rearing to takeovers. Game theory can be defined as the study of decision-making in which the players must make strategies affecting the interests of other players.

Game theory has a wide range of applications, including psychology, evolutionary biology, war, politics, economics, and business. In business, game theory is beneficial for modeling competing behaviors between economic agents. Businesses often have several strategic choices that affect their ability to realize economic gain. For example, businesses may face dilemmas such as whether to retire existing products or develop new ones or employ new marketing strategies. Game theory is applied for determining different strategies in the business world and offers valuable tools for solving strategy problems.